Several companies in the UAE are actively looking at offering long-term employee benefit and investment plans amid the rising employee attrition and even higher shortage of talent in the country.
This is expected to create a potential $100 billion market opportunity in the UAE alone across long-term saving products, pensions, end of service benefits and long-term incentive plans, as employers are likely to outsource their proposed plans to reputed and tech-savvy players in the sector, industry insiders said.
Industry estimates show that GCC companies are facing as high as 30 percent employee attritions annually, as against less than 20 percent attrition level globally.
Besides, about 50 percent of GCC employers believe talent shortage is a major issue, compared to 40 percent globally.
Employee-focussed wealth management and investment platforms such as Aurem and StashAway are learnt to be some of the tech disruptors which are already working with companies on their proposed employee supporting ecosystem.
Arabian Business last week reported that the Dubai-based Sukoon Insurance is set to launch a scheme aimed at investing gratuity funds and workplace saving in the UAE.
Industry experts said through initiation of medium-to-long-term financial and well being plans, businesses in the UAE – and also in the larger MENA region – can achieve major retention and return, besides leading to huge upside in businesses.
Employee engagement programmes to lower churn, boost productivity
Industry experts said active employee engagement programmes could lead to lower churn by as much as 30 percent in the UAE – aligning with global benchmarks – and also boost employee productivity by as much as 80 percent.
“Across the MENA region, employee benefits have traditionally been considered luxuries that are costly and difficult to manage. Only when there’s a legal requirement are benefits such as health insurance or end of service gratuity offered,” Michael Watkins, CEO of Aurem, told Arabian Business.
“However, with the UAE and Saudi Arabia now competing for the best global talent, there’s increasing pressure from employees who are looking for competitive compensation and expecting benefits similar to their home nations, where retirement plans and employee benefits packages are commonplace,” Watkins said.
A latest study by the global consultancy RedSeer revealed that the opportunity is sizable with more than $100 billion just in UAE across savings, pensions, end of service benefits and long-term incentive plans.
UAE increasingly becoming long-term destinations for expat employees
The RedSeer study said as the UAE increasingly becoming a long term destination of choice for working and living for a large number of expats, a vast majority of employees – more than 60 percent – are looking for support from employers for their long term financial security.
“The employees believe that they lack the tools for financial planning and need a trusted, preferrably tech enabled, partner to help them in this,” it said.
Industry insiders said several companies, which are currently working on these plans, are looking at outsourcing these services to well run, regulated businesses, in order to mitigate risks associated with such investments.
“This (outsourcing) can help employers to offer carefully curated investment products or even bespoke investment offerings tailored to each companies needs,” said a senior HR executive with a Dubai-based company, who wished not to be identified.
“Employers who pay closer attention to financial and personal well being of employees will increasingly emerge as winners in the talent war as well,” the executive added.
RedSeer said as expats are increasingly preferring to stay in the UAE compared to earlier times, long-term savings, specifically for the purpose of retirement planning, has emerged a key objective for them.
“Employee retention is becoming increasingly important as they are looking for employers who care about their well being,” Sandeep Ganediwalla, Managing Partner at the Middle East arm of RedSeer Strategy Consultants, told Arabian Business.
“Given that financial security is high on most employees, helping them plan for it should enable employers to differentiate themselves,” he said.
The RedSeer study said more than 70 percent of employees would be willing to stay beyond three years at their organizations if both short and long-term financial needs are met, while about 80 percent of employees would go above and beyond for companies if they feel their employer cares about their mental and financial wellbeing.
“More than 30 percent of employees would prefer to stay longer if the company offers lucrative employee benefit programmes,” the study said.
Watkins said there are a broad range of financial and non-financial benefits available today.
“On the financial side you have retirement and savings plans, incentive plans, salary advances, school fees and share plans to name a few.”
The Aurem top executive, however, said each of these are usually assessed based on cost, risk, operational effort and whether they are offered by sector competitors.
If you consider the first three alone, you can understand why so few UAE businesses offer these benefits today and many of them think there is no commercial gain to be had.
Turning cost in value
“In reality, the cost of offering these benefits often pales in comparison to the cost of replacing staff which on average is 30 percent of their salary,” Watkins said.
Besides, offering one or more of these benefits will also have a considerable impact on a business’s operational cash flow, he pointed out.
“Additionally, happier employees are shown to be more productive – meaning greater output for businesses that offer them. Loyalty and productivity are two great benefits paid back to the business,” Watkins said.
Follow us on
