2012 – A year of Compensation links for the UAE

Here is a gift for my readers: one year ago I wrote a piece describing the challenges facing HR and Compensation professionals in the UAE.

I have compiled the most relevant articles published since, in order to update you on the latest trends affecting the work environment in the UAE. The information is compiled by topic so you can go directly to the information most relevant to you.

Here are the topics :

1. UAE general and economic environment
2. Challenges for the mixed sociatey of the UAE
3. … And reasons to boast (after all, it is National Day !)
4. UAE labour law and cases
5. Healthcare
6. Pensions for UAE Nationals
7. Other debates and requests from the FNC for UAE citizens
8. Pensions and retirement for expats in the UAE

And don’t miss the links to the posts I wrote on these topics at the very end…

I hope you enjoy this compilation and will use it and share it with your colleagues 🙂

Happy National Day !

UAE general and economic environment

• As it gets more integrated in the global economy, the UAE growth rate should slow down a bit in 2012 to 3% (June, estimated).
• Latest communications point to growth between 3 and 4%   while others point more precisely to 3.5%.
• The Chief of Nasdaq Dubai explains why he thinks that IPOs of government or quasi-government entities would be a good idea for the economy of the UAE.
• Hay released its 2012 survey results for the UAE. Salaries increased by 4.9% in 2012, and forecast is 5.5% for 2013. The report finds that UAE nationals are paid an average 44% premium above the market. Yet, the turnover of nationals is also higher (…) “The turnover of nationals is 14%, which is double the turnover of non-nationals.”
• at the same time, UAE manufacturing workers’ wages are among the lowest in the world. Average worker wage is $3.38 against $45.5 in Norway – the highest.

Challenges for the mixed society of the UAE

• UAE residents say that their current savings levels are not enough.
• An interesting piece on the negative impact on society of the high levels of male high school dropouts in the UAE (it applies to all GCC countries).
• Real reasons why top talent leaves their company in the UAE explores causes other than purely financial.

… and reasons to boast

• Sky is the limit for Emirati women
• The majority of Dubai employers were looking to increase headcount in 2012
• An explanation why the UAE is attractive to Oil and Gas expats
• Dubai Taxi sets up a social fund for its 3,500+ drivers. It will provide interest-free loans, life insurance, medical treatment covered up to AED 1,000 and some form of termination payment when the job is lost for health reasons. I have to applaud this initiative – even if a lot of the taxi drivers were not aware of this fund on the day it was announced.
• UAE is favourite expat destination in the Gulf
• Mercer earlier issued its annual quality of life for expats report and Dubai comes first in the GCC (74^th globally), closely followed by Abu Dhabi, and here is another view on that report
• Lloyds TSB has launched an online tool to check on international schools including in the UAE

UAE labour law and cases

OK, first the legal bla bla : I am not a lawyer so the sources in this document are for information only and you need to check with your own lawyer before making any decision affecting your company. Common sense, really !

• The UAE Ministry of Labour has a section where you can download the latest version of the UAE Labour Law.
• This quick overview form Michael Page explains the changes introduced in 2011 to the UAE labour law
• And here is another resource on employment law and benefits in the UAE
• A wife’s job won’t affect the husband’s allowances. This digest of feedback on labour and employment law clearly states that in the UAE, the labour contract governs the relation between the employee and the employer. Therefore the allowances perceived by the spouse cannot be deducted from the employee’s pay.
• A new ruling in Dubai : if a work contract violates the law in favour of the employee, then the company has to abide by it. It seems the UAE is moving towards recognising some rights of employees in a fashion similar to the western countries…
• A contract is a contract and a company is bound by it – An emirati wins a pension case against his employer. I am glad that UAE courts maintain the principle of havong to abide by a contract alive and kicking.

Healthcare in the UAE

• In the UAE, Abu Dhabi is the onlyemirate where health care cover is mandatory. But thousands face cut in health benefits in Abu Dhabi as the cost of the premium rises by 20%
• UAE health patients begin to prefer to be treated locally rather than internationally, thanks to the improved quality of healthcare services in the country.
• And the UAE is starting to realise that health screening is necessary in the country as it helps contain long-term costs even if there is a short-term increase in the cost of health insurance for expats.

Pensions for UAE Nationals

• An overview of the law on pensions for UAE Nationals… with more details about contributions levels and the private sector
• And on the left column here, you can calculate the estimated pension salary – in case your Emirati employees are wondering, you can direct them here
• FNC recommends pension changes with payment for Nationals who resign from government once they reach 20 years of service, with no minimum age restriction set at 50 years. Current laws sets a minimum age of 50 years old to receive the pension. The article contains other details regarding the financial balance required for sustainability of the pension fund.
• This article describes discussions between the government, concerned about the financial aspects of the FNC requests to allow pensions after 20 years of service without minimum age to receive a pension, and the FNC, who wants to highlight “the humane side of things”.

For UAE Nationals : other debates and requests from the FNC

• First, a quick reminder of the role of the FNC in the UAE
• The role of the FNC is not easy in a young country, say its members, and any changes relating to more empowerment should be spread over time, says the Head of Political Sciences at UAE University.
• The FNC discusses social security with the UAE government, especially for the jobless Nationals
• And in this related article, you will find further statistics
• Some of the challenges of providing social benefits to the UAE citizens
• In June 2012, the FNC called for increases in the basic pay of National employees so their pensions can also be increases in the long-term

UAE pension and retirement – plans for expats

• An article from Business Week using interesting arguments, based on the economy, as to why pensions would be needed for expats in the UAE
• A clear and complete description of the current End of Service system for expats
• UAE and GCC retirement and residency. This BBC 4-minute video describes the situation of long-standing expats in the GCC, who currently can’t stay in the country past the age of 65. The video ends by mentioning that Qatar has announced the creation of a permanent residence visa in view of the 2022 World Cup – if this happens, I wonder if some of the other GCC countries will follow suit…
• Pensions for expats by end of 2012 ? A DED official mentions they would start by large companies and public establishments but does not clearly confirm whether it would start in Dubai only or at the federal level, and whether it would be compulsory or not. Of course, end of 2012 is now here and the scheme has not been launched yet – but the debate is increasing and I believe we will soon see a lot of progress on this topic. So get ready as it seems that UAE firms are wising up to retirement accounts
• These other 2 articles on the topic bring a few more details and feedback from analysts and economists

Related posts :

• The UAE 40th National Day and the Compensation manager
• A view on emiratisation from the Abu Dhabi Tawteen Council
• Pensions landscape – Europe and GCC part II
• An update on the project on expat retirement schemes in the UAE
• GCC pensions special – April 2012