More than 1,200 companies have hired Emiratis illegally in an attempt to get around the UAE's Emiratisation laws, latest figures have revealed.
The Ministry of Human Resources and Emiratisation said the breaches concern the employment of 1,963 Emiratis, in which companies were found to be using “fake Emiratisation” to circumvent the rules.
The numbers involved are for the period from mid-2022 to March 14, 2024.
“Our inspection team has successfully identified 1,202 private companies that have hired 1,963 UAE nationals illegally through attempting to circumvent Emiratisation targets and engaging in fake Emiratisation from mid-2022 until March 14, 2024,” the ministry said on social media platform X.
“Harmful practices that aim to undermine Emiratisation commitments will be dealt with firmly and according to the law.”
Penalties in place
Companies that are found to be in breach of the UAE's Emiratisation rules face fines from Dh20,000 to Dh100,000 for each case.
There is also the risk of being referred to prosecutors depending on the severity of the offence, according to the ministry.
Companies in breach must also make financial contributions towards Emiratisation targets and will be classified in the lowest ranking on the ministry's system.
Citizens found to be in breach will have their Emirati Talent Competitiveness Council programme (Nafis) benefits ceased and previous benefits will be recovered, the ministry said.
Emiratisation project
There are currently 95,000 Emiratis employed by the private sector, according to the latest figures from the ministry.
More than 20,000 companies have complied with the regulations.
From January 1 last year, private companies with more than 50 employees had to ensure that 2 per cent of staff members were Emirati.
This figure rose to 4 per cent by the end of last year and will rise to 6 per cent this year and 8 per cent next year, with the ultimate goal of hitting a 10 per cent target by the end of 2026.
Smaller businesses with 20 to 49 employees must hire at least one citizen by the end of 2024 and another by 2025.
The requirement applies to privately owned companies in 14 sectors, including property, education, construction and health care.
Previously, only companies with 50 or more employees needed to meet the targets for hiring citizens.
Earlier this month, the UAE approved a Dh6.4 billion budget to further boost Emiratisation in the private sector.
A new target was set for the country's Nafis programme, which launched in 2021, to ensure 36,000 citizens join the private sector workforce in 2024, the state news agency Wam reported.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Tightening the screw on rogue recruiters
The UAE overhauled the procedure to recruit housemaids and domestic workers with a law in 2017 to protect low-income labour from being exploited.
Only recruitment companies authorised by the government are permitted as part of Tadbeer, a network of labour ministry-regulated centres.
A contract must be drawn up for domestic workers, the wages and job offer clearly stating the nature of work.
The contract stating the wages, work entailed and accommodation must be sent to the employee in their home country before they depart for the UAE.
The contract will be signed by the employer and employee when the domestic worker arrives in the UAE.
Only recruitment agencies registered with the ministry can undertake recruitment and employment applications for domestic workers.
Penalties for illegal recruitment in the UAE include fines of up to Dh100,000 and imprisonment
But agents not authorised by the government sidestep the law by illegally getting women into the country on visit visas.
