UAE private sector unemployment scheme to launch in 2023

The UAE’s new insurance scheme to provide protection for employees in the private sector and federal government is to launch in the new year.

Under the new scheme, which was announced in May, workers will receive compensation for a period not longer than three months for each claim if they lose their job for reasons beyond their control, the Emirates News Agency (WAM) has reported.

The scheme, which was developed by the Ministry of Human Resources and Emiratisation (MoHRE) and a group of nine insurance companies, is divided into two categories. One covers employees with a basic salary of AED16,000 (£3,700) or less. The insurance for the employee in this category AED5 per month.

The second category includes those with a basic salary exceeding AED16,000, with the insurance set at AED10 per month.

Employees working on a commission basis can also subscribe to the scheme. The payment, which can be made by the employee monthly, quarterly, half-yearly or on an annual basis, is subject to value-added tax (VAT).

“The insurance coverage compensation is calculated on a monthly basis at the rate of 60% of the basic salary and for a maximum of three months for each claim from the date of unemployment,” WAM’s report said.

The claim must be submitted within 30 days of the date of unemployment.

The compensation will be paid within two weeks from the date of the claim and capped at a maximum of three months per claim. An employee is eligible for compensation “if they have worked and subscribed for at least 12 months to the insurance scheme as long as they have not been dismissed for a disciplinary reason or because of resignation”.

UAE Minister of Human Resources and Emiratisation, Abdulrahman Al Awar, said: “The new unemployment insurance law is an essential part of the legislative and legal structure that the government is keen to develop to meet the requirements of the national economy.

“This supports the UAE’s endeavours to be the next capital of the future, and a global incubator for talent and companies and investments, which can be achieved through economic and social development and the empowerment of human capital.”


Salaries predicted to stay at current levels

While the insurance protection scheme is good news for the UAE’s workers, Robert Half 2023 Salary Guide is not such good reading for emiratis.

The report said that rising rents and fuel prices are having an impact on employees in the UAE, with salaries expected to stay at current levels, despite rising inflation.

As a result, employers are more likely to offer a package of benefits and perks in a bid to retain staff, rather than pay rises.

“With fuel prices increased dramatically since January and rents increasing at the fastest rate in eight years, moving to the UAE as an expat is not as appealing as it once was,” said the Robert Half report.

“While businesses are unwilling to increase salaries beyond current levels, some are making changes to overall packages,” it said. Some 31% of employers are offering high or extra bonus payments and the same amount are increasing regular allowances.

The report said: “Rather than hiring new talent into the business at the most senior levels, many organisations are promoting from within.

“As candidate supply does not meet business demand in the UAE, career progression opportunities can help to retain highly skilled employees. However, opportunities for senior professionals are limited – but the market is booming for junior and mid-level candidates.”

Staff turnover could reach record levels if employers do not do more to retain employees, the report concluded. More than a quarter (28%) of employees are planning to look for a new job before the end of the year and almost half (46%) are considering a change next year.

“With the cost of living increasing quickly, it is no wonder that nearly half of employees are considering a new role in 2023. Employers should act now to retain their best talent or they could find it difficult to take advantage of growing opportunities in the UAE economy,” said Gareth El Mettouri, associate director for the Middle East.

The report also found that more than half (52%) of employees have noted an increase in colleagues leaving their company, corresponding with a decrease in employee satisfaction.