Accountants, accounting, international, digital, news, future, business, global

UAE to launch unemployment insurance scheme

UAE to launch unemployment insurance scheme

An unemployment insurance scheme designed to protect those who lose their jobs is to be introduced in the UAE.

UAE residents will pay AED 40 – AED 100 (£8.70 to £22) a year into an insurance scheme, and in return will be eligible to receive up to 60% of their base salary, up to AED 20,000 per month, if they become unemployed.

The scheme will be available to both Emirati and expats living in the UAE and working in the public and private sectors, for both local and foreign companies.

Employment expert Luke Tapp of law firm Pinsent Masons said: “This is a significant step forward for employment relations in the UAE.

“The unemployment scheme, particularly when coupled with changes to visa options, provide a genuine and practical safety net for expat and Emirati employees within the UAE. One of the key obstacles in attracting talent into the region has been around job and financial security. Implementing a nationwide social security system is the most practical and effective way of addressing any such concerns.”

Tapp added: “It is an important and transformational development for the UAE and will have an extremely positive impact on expats and UAE nationals, as well as private and public sector employers operating within the UAE.”

Minister of human resources and Emiratisation, Abdulrahman Abdulmannan Al Awar, confirmed the scheme in May. It will come into force in 2023.

Al Awar said that the unemployment insurance scheme provides a social protection umbrella and ensures a decent life and security for workers, in addition to attracting and retaining the best international talents and skilled workers.

He added that the UAE was aiming “to be a leader at all levels”, and that the scheme will enhance the competitiveness of the UAE labour market and its attractiveness to global talents through solutions that include all private and public sector workers.

The minister said the boosts the UAE business’s ability to attract and retain the best international talent and skilled workers by reducing business risks, helping to build a competitive, knowledge-based economy.

He said: “We have ensured that the scheme is flexible to allow the workers to agree on additional benefits with the insurance service provider, to reduce risks in the labour market for individuals and increase flexibility for companies to deal with changes, thus enhancing competitiveness and supporting stable living standards for families even during unemployment.”

The introduction of unemployment insurance comes in the wake of the UAE’s new Labour Law, which came into force in February 2022. The Labour Law protects staff, makes provision for part-time and flexible working, and brought in a right to paid compassionate leave.

In April, the UAE government announced an overhaul of its visa system, aimed at making it easier for foreigners to live and work in the country – including several categories which do not require a sponsor or host.

 

Massive majority want hybrid or fully remote working

Almost 90% of full-time employees in the UAE want to work either in a hybrid or a fully remote working model in the future, according to a recent Cisco Global Hybrid Work Study.

The study, which polled 1,050 full-time employees across the UAE, also examined five key areas of preparedness for hybrid work:

  • Company culture.
  • HR policy and processes.
  • Employee support.
  • Technology.
  • Cybersecurity and data privacy.

Commenting on the study, the vice president of Cisco Middle East and Africa, Reem Asaad, said: “Employees have experienced the benefits of hybrid work first-hand and many have expectations for it to continue. While most organisations in the UAE recognise the importance of flexible working, there remain opportunities for further improvement.

“A successful, future ready hybrid model must, in equal measure, deliver secure connectivity from anywhere, while also maintaining trust, wellbeing and unity among highly distributed teams.”

Additionally, the survey also found that most organisations in the UAE are prepared to make this shift towards hybrid and remote working in the future.

The study found that 83% of companies are supportive of hybrid work practices, while more than 28% say that their companies are “fully prepared” and 43% say that they are “prepared” for the hybrid work future.