The Impact of Emiratisation on Global Mobility Policies: Challenges and Compliance Solutions

The Impact of Emiratisation on Global Mobility Policies: Challenges and Compliance Solutions

The Emiratisation initiative was launched by the UAE Federal Government to increase the employment percentage of UAE nationals in the private and public sectors. The Emiratisation initiative has been in place for the past decade in the public sector; however, it has seen stagnant growth in the private sector until its strict implementation in 2022 pursuant to the Ministerial Resolution No. 279 of 2022 (Resolution).

While the Emiratisation policy aims to enhance employment of Emiratis in the private sector, it presents unique challenges for multinational companies and small to medium sized businesses in the region who are navigating global mobility between their workforces. Companies must manage to strike a balance between adhering to the Emiratisation quotas and hiring foreign talent who are critical for their operations.

Applicability of Emiratisation and Quotas

Emiratisation applies in mainland UAE, but not currently in free zones. Many free zones are focused on industries that require specialist skills where setting Emiratisation rates may not, at this stage, be feasible.

With effect from 1 January 2023, all private sector companies in the mainland employing 50 or more people are subject to Emiratisation rates, with a mandate to increase Emiratisation ratios within their workforce by 2% annually. The rate of Emiratisation is monitored half yearly, with companies required to comply with rates of 1% of the quota every 6 months.

Ministerial Resolution No. 455 of 2023 extended Emiratisation requirements to businesses in certain sectors employing between 20 and 49 employees. Failure to comply with the Emiratisation quota and meet the target set for 2024 would lead to a penalty of AED 96,000 in January 2025. This will increase to AED 108,000 for those who do not meet the 2025 target and will be required to pay the financial contribution in January 2026.

Penalties

Failing to meet the Emiratisation quotas, which are evaluated every six months, can result in financial penalties and restrictions on recruitment by the Ministry of Human Resources and Emiratisation (MOHRE).

The Resolution sets out that if the targets are not met, a monthly penalty of AED 9,000 will be imposed for each Emirati national not recruited. This penalty will increase by AED 1,000 annually and in 2026 will be AED 10,000.

The MOHRE also imposes administrative penalties on non-compliant businesses which include suspension of the MOHRE portal, inability to recruit new employees and downgrading the business registration category.

Companies need to be aware of the penalties they may face due to non-compliance and look to plan ahead to meet their quota.

Key Challenges for Global Mobility Policies

Since the strict implementation of Emiratisation in 2022, organizations have had to develop and build strong global mobility policies taking into account the Emiratisation requirements in the UAE.

In practice we have seen businesses struggling to develop mobility policies for their workforce while remaining compliant with the Emiratisation quota.

Role Requirements

Emiratisation quotas can disrupt traditional workforce planning, particularly when local talent is not readily available for niche roles. It is key for young Emirati talent to gain exposure and experience in all industries. When this is not the case, businesses will have no other option but to engage foreign talent to perform that role.

To circumvent the role requirement issue, businesses have started targeting local universities to recruit Emirati talent who are keen on joining the private sector. Recent graduates have shown an interest in starting their careers in the private sector to develop their skillset. Developing partnerships with local education institutions will give businesses access to Emirati talent at a very early stage. Organizations should look into introducing internship and training programs for young graduates to understand the workings of the private sector.

Retention of Talent

Companies have to find a way to balance their workforce with foreign and local talent, to adhere to the Emiratisation targets. However, the biggest obstacle in the Emiratisation initiative has been the retention of Emirati talent on a long-term basis. Organizations must promote inclusive environment and acknowledge that work-life balance and cultural sensitivity are a few of the guiding factors to successfully engage and retain Emirati talent.

Operational Delays

Often finding the right Emirati candidate for a role can be a lengthy process for companies as historically, Emiratis have preferred to work in the public sector. Delays in the recruitment process can delay project timelines for organizations who are working on time-sensitive projects.

Emiratisation Compliance and Global Mobility Solutions

1. Blended Workforce Models: Businesses have to adopt a blended workforce of Emirati nationals and expatriates, ensuring compliance with the Emiratisation quota while retaining key talent in the company. It is key that organizations take the initiative to upskill Emirati candidates and employees through mentorship programs and training that will develop their skillsets.

2. Temporary Employment Solutions: Businesses may choose to engage with foreign talent on temporary or project-based assignments, which will in turn reduce the impact on their expatriate employee quotas. This can be facilitated via manpower supply companies or partnering with other entities and entering into a secondment arrangement. This will reduce the businesses having to employ foreign talent on a full-time basis for short term projects whilst remaining compliant with the Emiratisation requirements.

3. Retention of Emirati Nationals: Public sector roles have traditionally been the employment of choice for Emiratis. Businesses should develop retention projects that will attract Emirati talent to the private sector. This can include:

· cultural sensitivity;

· financial upliftment;

· reducing work-life balance challenges faced by Emiratis compared to the public sector;

· investing in training and developing Emirati talent; and

· developing policies that provide career progression for Emirati talent.

NAFIS

NAFIS is a program introduced by the UAE Cabinet, aimed at increasing the competitiveness of Emirati human resources in UAE private sector companies.

Above the traditional compensation packages, and assisting businesses with finding the right candidate for the role they are seeking to recruit for, the program offers several benefits to the participants, including:

· Emirati Salary Support Scheme

· Pension Contribution

· Unemployment Benefit

· Child Allowance Scheme

· On the Job Training Support

· Apprentice Program Support

Conclusion

Emiratisation has introduced significant changes to the UAE’s labor market, compelling businesses to adapt their global mobility policies to align with local regulations. As of 2023, it has been identified that 61% of young Emirati graduates are keen on joining the private sector; however they believe that it is harder to secure employment in the private sector and they have less job security compared to the public sector.

Businesses need to add an emphasis on training and incentivizing Emirati nationals and bridging the skillset gap between foreign and local talent. Integrating Emiratis in the private sector workforce will enhance talent development. Companies now need to focus on strategic workforce planning and investing in local talent in navigating the challenges of global talent mobility.