Few countries in history have experienced, in less than four decades, such a huge shift in income and development comparable to that of the United Arab Emirates (UAE) during the last part of the twentieth century.
Established in 1971, and made up of a federation of seven emirates: Abu Dhabi, `Ajman, Al Fujayrah, Sharjah, Dubai, Ra's al- Khaymah, and Umm al-Qaywayn, the UAE has undergone a profound transformation and emerged from relative obscurity in global affairs to become one of the wealthiest and most dynamic of the smaller countries of the world.
In April 2004, the UAE signed a Trade and Investment Framework Agreement (TIFA) with Washington and in November 2004 agreed to undertake negotiations towards a Free Trade Agreement (FTA) with the US.
Today, the UAE has a highly industrialised economy and is a modern state with a high standard of living; and with a recorded GDP of US$175bn in 2006 (Ministry of Finance and Industry), statistics also indicate that the UAE currently has one of the fastest growing economies in the world.
This rapid economic growth is thanks to an oil-driven boom. Economic reform has enabled Arab nations to create new jobs for a swelling population. In recent years, the UAE government has increased spending on job creation and infrastructure expansion, and is opening up its utilities to greater private sector involvement.
Although the UAE is becoming less dependent on natural resources as a source of revenue, petroleum and natural gas exports still play an important role in the economy, especially in Abu Dhabi.
The labour market is still heavily reliant on foreign skilled and unskilled workers, who constitute around 80% of the 3.1 million general population, and foreigners also account for 90% of the workforce in the private sector, including domestic workers. As of May 2006, according to the Ministry of Labour, there were 2,738,000 migrant workers in the country.
Because the UAE has not signed most international human rights and labour rights treaties, migrant workers are particularly vulnerable to serious human rights violations. Immigration sponsorship laws that grant employers extraordinary power over the lives of migrant workers are in part responsible for the continuing problem.
Abuses against migrant workers include non-payment of wages, extended working hours without overtime compensation, unsafe working environments resulting in deaths and injuries, squalid living conditions in labour camps, and withholding of passports and travel documents.
United Arab Emirates at a Glance
Population 4.4 million
Labour force 2.968 million
Labour force by sector Services (35.8%); industry (61.9%); agriculture (2.3%)
Talent challenges and strategies
· Emiratisation: Dependence on a large expatriate workforce and the oil industry are significant long-term challenges to the UAE's economy. The process of emiratisation has been pursued aggressively by the Ministry of Labour and Social Affairs in recent years, with some success in sectors such as telecommunications and banking. In April 1999, an agreement giving priority to graduates of the Higher Colleges of Technology (HCT) in recruitment for jobs in both the public and private sectors was signed between HCT and the Ministry of Labour and Social Affairs. However, the Ministry is in favour of simultaneous development of the economy and HR and is reluctant to alienate the private sector by forcing a quota for employment of nationals.
· Job creation: To absorb the large outflow of national graduates and tap into the talent market, the Ministry of Labour and Social Affairs is launching a new website - The Labour Market Information System (LMIS) - which will advise nationals on emerging job opportunities and trends in the employment market. Comprising a data bank on job vacancies in the country's private and public establishments and on available job seekers, the site will provide potential job applicants with a chance to file their application forms and CVs directly with the website. Alternatively, private companies or government establishments looking for employees in specific specialisations will be able to access the data bank.
· PANDE: The government has sought to tackle the employment issue by setting up the Public Authority for National Development and Employment (PANDE), an autonomous body under the supervision of the Minister of Labour and Social Affairs. Established in mid-1999, the authority is responsible for matching the real needs of employers to the qualifications of UAE nationals seeking employment. The Labour Market Information System (LMIS), also under development, will advise nationals on emerging job opportunities and trends in the employment market.
Employment laws
· Employment contracts: Administered by the Federal Ministry of Labour and Social Affairs, Labour Law in the UAE is loosely based on the International Labour Organisation's model. UAE Law No. 8 of 1980, as amended by Law No. 12 of 1986 (the "Labour Law") governs most aspects of employer/employee relations, such as hours of work, leave, termination rights, medical benefits and repatriation. The Labour Law is protective of employees in general and overrides conflicting contractual provisions agreed under another jurisdiction, unless they are more beneficial to the employee.
· Conditions of employment: It is common practice in the UAE to employ persons on an initial probationary period. During this period, both the employer and the employee may terminate the employment contract with immediate effect without providing a valid reason or notice. The probationary period can last for a maximum of six months.
· The normal maximum working hours are eight hours per day or 48 per week. However, these hours may be increased to nine daily for people working in the retail trade, hotels, restaurants and other such establishments. Similarly, daily working hours may be reduced for difficult or dangerous jobs. Many businesses work on a two shift system (for example, 8am-1pm and 4pm-7pm). Certain types of workers, notably domestic servants, may be obliged to work longer than the mandated standard hours.
· Manual workers are not required to do outdoor work when the temperature exceeds 112 degrees Fahrenheit.
· As in all Muslim countries, Friday is the weekly day of rest. In practice, commercial and professional firms work 40-45 hours a week and government ministries about 35. The weekend for office workers has traditionally been Thursday afternoon and Friday, but a number of organisations have changed over to a five day week with Friday and Saturday as the weekend. During the Muslim holy month of Ramadan, normal working hours are reduced by two hours per day.
· There are 10 days of public holidays (paid) in any year. The employee's annual leave totals two days for every month if his or her service is more than six months and less than a year. In every completed year of service after the first, an employee is entitled to 30 days annual paid leave. This is in addition to public holidays, maternity leave for women and sick leave.
· Termination of employment:
Contracts without a specific term can be terminated by either party once 30 days' notice has been given. Those employed on a daily basis are required to give notice as follows.
- One week's notice if they have worked for more than six months but less than one year
- Two weeks' notice if they have worked between one and five years
- One month's notice if they have worked more than five years
If notice is not served by either party, compensation must be paid to the other party. Compensation is equal to the employee's last wage and must be paid for the period of notice not served.
· Maternity leave: Women are currently entitled to 45 days paid maternity leave in addition to any other leave entitlements. This policy is at present under review with the possibility of increasing the maternity leave to 90 days and also instituting an optional leave for up to two years on reduced salary to enable mothers to nurse infant children.
Tax and contributions
· There is no levy in United Arab Emirates either on personal income or on the profits of companies. The only tax applicable to all companies is the right taken by the municipality in every Emirate during the liberation or the renewal of a commercial licence.
This rate amounts to 10% of the annual amount of the office's and store's rent as well as 5% of the annual amount paid by the company to accommodate its employees.
Social security
Under the system set up in September 1999, UAE nationals working for private companies are entitled to the same social security and pension benefits as UAE nationals working for the government. Through the provision of benefits in the private sector, the government hopes to attract more nationals to non-government jobs, thereby speeding up emiratisation of the workforce. Under the national pension and social security scheme, nationals who have contributed to the scheme will be eligible for retirement benefits, disability benefits and compensation on death.
Minimum wage
There is no legislated or administrative minimum wage in the UAE. Supply and demand determines compensation. However, according to the Ministry of Labour and Social Affairs, there is an unofficial, unwritten minimum wage rate that would afford a worker and family a minimal standard of living. The Labour and Social Affairs Ministry reviews labour contracts and does not approve any contract that stipulates a clearly unacceptable wage.
Most foreign workers receive either employer-provided housing or housing allowances, medical care, and homeward passage from their employers. Most foreign workers do not earn the minimum salary of $1,090 per month (or $817 per month, if a housing allowance is provided in addition to the salary) required to obtain residency permits for their families.
Largest employers
1. Emirates Airlines - 20,273
2. Abu Dhabi National Oil Company - 19,300
3. Abu Dhabi National Hotels - 12,000
4. Etisalat (telecommunications provider) - 10,000
5. Abu Dhabi Water & Electricity Authority - 9,000
6. Dubai Aluminium Company Limited (DUBAL) - 3,300
7. Abu Dhabi Gas Industries Ltd - 2,850
8. Emirates Place - 2,000
9. Emaar Properties - 1,844
10. Abu Dhabi Commercial Bank (ADCB) - 1,500
Case study: Dubai Aluminium Company Limited (DUBAL)
Established in 1979, the Dubai Aluminium Company (DUBAL) is one of the largest single site aluminium smelter operations in the eastern world.
With 3,300 employees representing 20 nationalities and a commitment to lifelong learning and personal development, DUBAL is among the UAE's most respected employers. It is a recognised leader in promoting opportunities for UAE nationals. DUBAL's graduate training program is widely considered to be one of the country's best, effectively preparing new recruits for supervisory posts in operations, maintenance and administration.
· Training and development
To provide a wide range of learning opportunities for its employees, DUBAL's training and development department coordinates a broad range of technical and competency development programs as well as on-the-job training courses.
These include the Development Pool program, which grooms middle managers for senior management roles and administers Summer Training programs, a Graduate Training program, an Open Learning unit and a Scholarship program that supports higher learning.
DUBAL'S structured management development programs are accredited by the UK-based Institute of Leadership and Management (ILM) for first line supervisors and middle managers, and also offers extensive executive training opportunities to employees at recognised international business schools including INSEAD in France and IMD in Switzerland.
· National initiative
In line with the emiratisation initiative (supported by the Ministry of Labour and Social Affairs), DUBAL is also committed to providing career opportunities for UAE nationals. At the end of 2005, UAE nationals represented 24% of DUBAL's total workforce and more than 65% of its senior management.
Five pre-employment training programs, ranging from three months to three years in duration, prepare UAE school leavers and other qualifying nationals for maintenance and operations positions in the smelter, power station and desalination plant. The training provides on-the-job skills, support in core subject areas including English language skills, mathematics, science and other related academic subjects. In addition, an on-site Open Learning unit provides National employees with ongoing opportunities to develop their technical knowledge and gain additional academic qualifications.
· Power to the people
The DUBAL Suggestion Scheme was started in May 1981 with the simple concept of involving the most valuable asset of any organisation - its people.
In 2006, 7,864 suggestions were implemented and awarded, attaining a participation rate of 100%. DUBAL's suggestions have also won awards in international competitions, including IdeasUK of the UK and America's Employee Involvement Association (EIA).
· Moving forward
Supporting the government's wishes to raise the standard of professionalism amongst young UAE nationals, DUBAL has commenced its annual Summer Training program, which aims to expose UAE students to the company's renowned methods of operation. A group of 50 students enrolled for the two-month initiative, which will run from the first week of July till the end of August this year.
The annual two-month training program aims to raise the standards of professionalism amongst young UAE nationals and forms part of DUBAL's continuing nationalisation drive to improve understanding of the aluminium industry's workings amongst young UAE nationals.
Facts and trivia
· A ministerial decision issued in December 2005 stipulated that companies which have over 100 employees will have to emiratise their public relations officer position. The PRO, also known as the government relations officer, liaises between the firm and government bodies.
· The government failed in 2006 to put in place a minimum wage as required by the UAE Labour Law of 1980. 2006 saw an increasing number of public demonstrations by migrant workers protesting non-payment of wages. Twenty-five hundred construction workers rioted in Dubai in March, 2006, demanding better working conditions and higher wages. In May 2006, thousands of construction workers working for Besix, a Brussels-based company, went on strike to demand an increase in their wage of US$4 a day and better working conditions. The government deported 50 strikers.
· In March the government announced that it would legalise trade unions by the end of 2006, but as of November 2006 it had taken no steps to do so. Instead, in September the government introduced a law banning any migrant worker who participates in a strike from employment in the country for at least one year
Sources:
· www.lowtax.net/lowtax/html/dubai/jdblab.html
· www.state.gov/g/drl/rls/hrrpt/2001/nea/8306.htm
· www.uaeinteract.com/news/default.asp?cntDisplay=40&ID=144
· www.uae.gov.ae/Government/employment.htm
· www.emiratisation.org/content/view/1004/2/
· http://www.state.gov/g/drl/rls/hrrpt/2000/nea/824.htm
· http://guide.theemiratesnetwork.com/living/employment.php
· http://hrw.org/englishwr2k7/docs/2007/01/11/uae14724.htm
· http://www.fita.org/countries/uae.html
· http://www.zawya.com/marketing.cfm?zp&p=/cm/profile.cfm/cid653429
· http://www.zawya.com/cm/profile.cfm/cid759385
· http://www.government.ae/gov/en/biz/industry/about.jsp
· http://www.oracle.com/global/me/press/2006/etisalat_hrms.html
· http://www.dubal.ae/default.aspx