Insurance scheme is a winner for everyone
The reforms announced this week are good for employees and employers alike
In one decisive move on Wednesday night, the UAE Cabinet sent two powerful messages, marking a sea-change in what is expected of both workers and employers in the country’s private sector. Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, announced the approval of new legislation that replaced the requirement for employers to provide a Dh3,000 bank guarantee for each worker they hire with a labour insurance system based on welfare. Firstly, it means that Dh14 billion will be released back to employers, providing a stimulus for the economy. It is expected that this capital will now be used by businesses to invest in future growth. The move also lowers the cost of doing business, making the UAE more competitive. The decision highlights the importance of efficiency and reflects the Government’s belief that business owners should no longer be burdened with unnecessary or outdated processes when a better option can be made available.
In this case it is a simple yet effective system that also provides peace of mind to roughly 466,000 labourers – those most affected by this move – who are far from home in pursuit of greater prosperity. The new system provides up to Dh20,000 of cover for their end of service benefits, vacation and overtime allowances, unpaid wages, return air tickets and work injuries. It means that whatever happens during the course of their employment in the Emirates, their own needs will be met and backed up by the full weight of the law. This is the key point: bringing that weight to bear, in reality, and on the ground.
In the past, that has not always been the case, even with the Government not shying away from tackling issues concerning wages, medical expenses and workers stranded in the country after their employers absented themselves of all responsibilities towards them. However, it has not always been easy to monitor abuses in a fast-growing economy and nation. The new insurance system is an elegant solution to the enforcement issue. It will be inexpensive for employers to adopt, with each policy costing Dh60 per worker, per year. Compared to a Dh3,000 bank guarantee, that’s not much at all to pay to ensure that someone’s dreams of a better life do not take a turn for the worse. The Government has been reforming the labour market for many years now, including the Wages Protection Scheme, which oversees and regulates the payment of salaries to all employees.
Whether it’s boom or downturn, such changes ensure that both workers’ and employers’ rights are considered within the UAE’s rapid growth trajectory, underpinned by the vision to establish the UAE among the world’s most successful countries. Sheikh Mohammed himself said on Wednesday that “a strong economy drives us as a nation to be among the first and best”. He highlighted that remaining agile and flexible towards the needs of all private sector stakeholders, who will drive future growth in the UAE, is another sign of how this goal is being met.