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Tue 26 Jan 2010 07:20 AM

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Subsidy plan to get Emiratis into private sector

Official says quotas will be phased out, subsidies will help plug salary gap.

Emiratisation quotas imposed on private companies could eventually be scrapped with subsidies offered to encourage them to hire Emirati staff, it was reported on Tuesday.

Abdullah al Darmaki, the general manager of the Abu Dhabi Tawteen Council (ADTC) said the funds would allow private companies to match the salaries offered by the public sector.

In comments published by UAE daily The National, he did not give a timeline for the phasing out of the quota system, but suggested it would happen as more Emiratis become qualified to enter the private sector.

The subsidies would start immediately, he said, adding: “When you look at the financial model of a certain sector and you realise that the implication of hiring an Emirati is very high, this is where we look into; over a given limited period of time, the Government will subsidise the salary."

Currently, private companies in certain sectors are obliged to employ a certain number of Emiratis but on average, Emiratis make up just four per cent of the private sector workforce, compared to 52 per cent of public sector one.

Al Darmaki told the paper that any subsidy would be reduced over time until the Emirati employee had enough experience to deserve a higher salary.

“Our quota is only there for a limited period of time, I believe,” he said. “Once the education system takes care of itself, and once the employers do find the competence within [Emirati] individuals, you don’t need a quota,” Al Darmaki said at spon the sidelines of the Emiratisation Employer Forum 2010.

The authorities hope that some of the measures proposed at the forum will reduce the Emirati unemployment rate, which has reached 14 per cent in Abu Dhabi and is higher among women and in rural areas.

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Sandpiper 10 years ago

Someone please explain to me why Emiratis need help getting jobs be it in the form of incentives to employers, or quotas. According to recent reports, the percentage of Emiratis in the over all population is around 15%. The UAE is a famously wealthy country. If educated and instilled with a proper work ethic, surely such a small percentage of the population would easily find jobs and excel in a free economy. By forcing employers to hire them by imposing quotas, or subsidising their salary the authorities will give the impression that they are less capable or less worthy of the jobs, and need the silver spoon treatment to succeed, causing resentment and polarisation.

Mounir 10 years ago

Sandpiper: A clerk in Abu Dhabi Municipality makes over 30,000 a month. The same position in a private company would pay how much? 3,000? maybe 5,000? This is why they dont work in the private sector, and the private sector doesnt hire them. What private sector bosses dont understand is that a bachelor expat does not need much to live on in the UAE since his family is back home: a UAE citizen, however, has no one 'abroad' to send remittences to, and we all know that life in the UAE is indeed expensive. A local should not live thrifty like us expats do: we save money to build a future for ourselves in our home countries, the local is already in his home country. for those who will tell me "oh well expats with families should be paid just like locals with families", my response is quite simple: the expat made a conscious decision to leave his homeland for the UAE for many reasons, surely one of them is for the availability of positions and jobs that cant be found in his homeland. the vast majority of UAE citizens do not need to leave their homeland and therefore should not be 'forced' into the same position as the expat.

BQ 10 years ago

Whatever extra they might be getting from the government they will spend it inside this country and they are spender. An expat will send most of his income back home which doesn’t benefit this country in term of economy and money circulation. I’m sure every country has its own initiatives to prioritize the employment of its citizens, we don’t here any complains

Abu Ali 10 years ago

I should add that companies (with 100 staff and more) who do not hire Emiratis should be taxed according to the percentage of Emiratis. Tax ---- % of Emiratis 30% if it doesn't have a single Emirati 25% if Emiratis are between 0 and 5% 20 if Emiratis are between 5 and 10% 15 if Emiratis are between 10 and 20% 10% if Emiratis are between 20 and 25% 5% if Emiratis are between 25 and 30% 0% if Emiratis are over 30%

Wildwine 10 years ago

Agree with Abu Ali, but then why don't they simply stop importing "cheap" labour from South Asia????

Etisalgood 10 years ago

I think this is great plan and it should provide a boost to Emirati employment in the private sector. Letting the government foot a good chunk of the bill through subsidies will help alleviate the reservations the private sector has and reduce the opportunity costs associated with hiring Emiratis.

Don 10 years ago

Mounir, Abu Ali and Wildwine you seem to be saying that Emiratis should be paid more to do the same job simply because they want more money. This is nonsense, everyone wants more money, the question is WHY should the government pay more money to Emiratis in the same job as their colleagues, it is going to cause real resentment, especially as everyone knows they are untouchable, can not be fired. Imagine Emirati office workers taking home more than their boss. It would cripple the effectiveness of organizations. Or are you sayingn they should have more money because they are more valuable as human beings that Asians ? As I am sure Mounir will verify, in Canada as in the rest of the world, equality laws strictly forbid anyone getting more or less pay based on their nationality, people get paid what they deserve based on their abilities and effort.

The Consultant 10 years ago

Mounir, your argument works in the limited circumstances you have described, i.e. a low-grade, low-pay job; in that situation there is simply no contest, any Emirati that wants that sort of job will get a much better salary from a government-related employer. However, I am sure most Emiratis (and the government for that matter) have aspirations to work at supervisory or managerial level. In that case, the sterotype of an Asian batchelor working for next to nothing because he can't get a job back home does not really stand. At this level, most private sector employers recognise that their employees (of any nationality) would like to have their families with them and have a reasonable standard of living. As such, the cost differential between expat and local workers is not as extreme and could be bridged with a subsidy. However, there are other reasons why private sector employers (including some locally-owned businesses) prefer to employ expats, and a major factor is control. It is a major undertaking to discipline or fire an underperforming local employee, whereas you can get rid of an expat pretty easily. Better yet (if you're an evil employer) you don't have to give expat employees inflation-matching payrises, you just prevent them leaving by making it company policy not to issue NOC's! Although it may be counter-intuitive, the best way to encourage employers to take on locals would be to remove the power of sponsors to object to an expat changing jobs (subject to a minimum period between job changes and except in cases of serious misconduct). This would erode the attractiveness of expats from a control perspective, and would also allow the job market to establish a geniune market price, without it being artificially held down by people trapped by exploitative employers, thus also eroding the cost differential between expats and locals (although the effect would be moderated by the availability of fresh labour that could be brought in from overseas). The laws of supply and demand suggest that this should also improve the demographic situation, since companies will cut down on expat employees as they become more expensive, not to mention helping to dispel the image of UAE workers as "slave labourers". Win-win, if you ask me.

John Thomas 10 years ago

Completely agree with you Don - I WOULD NEVER pay an Emirati more than I would pay another National for doing the same job - and never will! That is proposterous and would not be allowed in any other country. Even here in Dubai, the salaries and benefits I pay my people in Dubai are equivalent to the salaries we pay for the same jobs back in the US - work is exactly the same, that is the reason why I have a multi-national amazing team of dedicated people working for me (unfortunately no Emiratis) I would rather shut my company down than being forced to do so. Pay is based on MERITS, Qualifications and Performance, not based on Nationalities, are we back in the stone age?? No wonder this place is in such bad shape.

Cook 10 years ago

Well said Don. And who was the joker who said tax companies based on emarati employees? Surely you do not run a business, or have any idea of the number of companies in the UAE vs the local population. If every company tried to retain 30% with local employees, we set ourselves for another problem. More demand less supply. Procreation.