New UAE labour law changes 'likely to boost foreign investment'

Links Group says new legislation will attract more migrant workers to the UAE, expanding the talent pool
New UAE labour law changes 'likely to boost foreign investment'
By Staff writer
Sat 24 Oct 2015 06:16 PM

New ministerial decrees to protect foreign workers in the UAE are likely to positively affect foreign direct investment, according to Links Group, a UAE-based provider of commercial facilitation and advisory services.

The three resolutions, which come into effect in January 2016, aim to improve transparency of job terms and employment contracts, outline how contracts can be broken, and could make it easier for workers to change employers.

John Martin St Valery, founding partner of Links Group, said: "The new decrees are designed to protect both employer and employee rights and will likely see the labour market grow as a result.

"By decoupling sponsorship of foreign employees from labour relations, you start to bring transparency to the employer-employee relationship. This will help attract more migrant workers to the country, which will of course boost productivity.

"Giving employees the ability to change jobs more easily also stands to boost productivity because of higher levels of job satisfaction. Retained employees are more likely to be happy in their jobs, and therefore higher performing.

"This increased availability of labour, coupled by a more contented and productive workforce is likely to positively influence FDI location. Foreign-owned firms tend to favour locations in which they have a larger pool of talent from which they can build their workforce."

The UAE is one of several Gulf Arab states whose treatment of foreign workers has been criticised by campaign groups demanding the repeal of what they consider oppressive labour laws.

Much of this concern is focused on a sponsorship system known as "kafala" that most Gulf states enforce on foreign workers. It not only regulates entry and residence, but also requires they seek permission from employers to change jobs.

St Valery added: "The new UAE labour rules are a positive development, especially for attracting inward investment. Firms seeking to maximise their profits are most interested to locate to countries with more flexible labour markets, which allow firms the freedom to adjust to prevailing economic conditions."

Most blue-collar workers in Gulf Arab states are hired on contract from countries like Pakistan, India, Bangladesh and the Philippines, many of whom have come to the Middle East to escape poverty in their home country.

Typically employed on low wages, workers are usually housed in camps with basic facilities on the outskirts of cities.

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