Are you looking into the new Emiratisation regulations and wondering how they might affect you as an investor and entrepreneur in the UAE? The new policy aims to boost Emirati nationals in the workforce and bolster the economy’s sustainability and diversity.
In this article, we’ll look into the following:
- Definition of Emiratisation
- Historical background of Emiratisation
- Objectives and strategies of Emiratisation
- Major sectors targeted by Emiratisation
- Rules for the private sector in promoting Emiratisation
- Challenges facing the implementation of Emiratisation
- Potential impact on the UAE economy and society
Definition of Emiratisation
Emiratisation in the UAE refers to a new government policy by the United Arab Emirates (UAE) to increase the number of Emirati citizens working in the private and public sectors. The policy was introduced to address concerns about the high level of expatriate workers in the country and the need to create more job opportunities for Emiratis. The new Emiratisation law aims to enhance the local contribution to the national economy by increasing the number of UAE nationals within the UAE workforce.
This fantastic initiative will provide Emirati nationals with better access to employment and training opportunities. It is designed to promote the development of a skilled and diverse workforce in the UAE.
Emiratisation has been implemented across many sectors, especially in private sectors, including finance, hospitality, retail, and healthcare. Companies that meet specific Emiratisation targets are eligible for various benefits, such as reduced license fees and other government services.
All employers with over 50 employees are mandated to raise their Emiratisation rate by 2 percent of overall skilled workers annually. The new law applies to companies registered across the mainland UAE – those in free zones are not obliged to apply the Emiratisation laws. However, they are free to contribute to the objectives of the law and the government’s initiative to build a wholly sustainable economy for all.
The overarching goal of Emiratisation is to create around 75,000 new jobs in the private sector by 2026, with a target of 10 percent Emiratisation.
Historical background of Emiratisation
Emiratisation stems from the UAE’s efforts to develop a sustainable and diverse economy. Before the discovery of oil in the late 1960s, the UAE was predominantly an agrarian society with a small population of pearl divers and traders. The discovery of oil transformed the country’s economy and led to the rapid influx of foreign workers in the following decades.
In the early 2000s, the UAE government began to implement policies aimed at increasing the contribution of Emiratis to the national workforce – especially in the private sector. While foreign national workers played an essential role in the country’s development, Emirati leaders raised concerns about the over-reliance on foreign labour and the potential impact on the country’s social and cultural fabric.
The various Emiratisation plans and policies have evolved over the decades to include a range of initiatives and incentives designed to encourage private companies to hire and train Emiratis. These include training and development programmes, government subsidies, and quotas for the employment of Emiratis in some industries.
The plans also address concerns about the high levels of youth unemployment among Emiratis and bolster the sustainable development and prosperity of Emirati nationals in skilled job sectors.
Objectives and strategies of Emiratisation
The main objectives of Emiratisation are to raise the number of Emiratis in the national workforce and to reduce the country’s reliance on foreign labour. In this way, the law aims to create more job opportunities for Emirati workers, especially in highly-skilled and higher-paying jobs.
Emiratisation seeks to enhance the skills and capabilities of Emirati workers through training and development programmes to make them more competitive in the local job market. The initiative also addresses the low levels of youth employment among Emiratis, ensuring that young job seekers have equal access to quality education, training, and job prospects.
The new Emiratisation policy employs several strategies to meet its goals. These include:
- Partnering with the private sector: The policy recognises that the private sector is a key driver of economic growth and job creation. Hence, it seeks to work in partnership with the private sector to create more job opportunities for Emirati citizens.
- Quotas and incentives: The government has set quotas for the employment of Emiratis in certain industries and offers incentives to companies that meet these targets.
- Training and development programmes: The Emiratisation policy includes a range of training and development programs designed to enhance the skills and capabilities of Emirati workers and make them more competitive in the job market.
- Education and awareness campaigns: The government has launched several education and awareness campaigns to encourage young Emiratis to pursue careers in high-skilled industries and to promote the importance of vocational and technical education.
- Regulations and enforcement: The government has introduced regulations to ensure that companies comply with Emiratisation requirements and has established enforcement mechanisms to monitor compliance.
Major sectors targeted by Emiratisation
The current Emiratisation quotas are:
- 2% for commercial entities with over 50 employees
- 4% for banks
- 5% for insurance companies
The UAE aims to reach an Emiratisation quota of 10 percent by 2025 as part of the UAE’s “Projects of the 50.” Currently, Emiratisation is implemented across various sectors of its economy, focusing on industries where foreign workers have traditionally dominated.
Some of the major sectors targeted by Emiratisation include:
- Banking and finance
- Hospitality and tourism
Rules for the private sector in promoting Emiratisation
The UAE has instituted several rules and regulations for promoting Emiratisation throughout the private sector. These rules aim to increase the number of skilled Emiratis contributing to the national economy.
These rules mainly concern companies that fall under the jurisdiction of the Ministry of Human Resources and Emiratisation (MoHRE), i.e., those companies operating on the mainland. Private sector companies with 50 or more employees must increase their Emirati workforce through a quota system of 2 percent annually until the company reaches 10 percent in 2026. The MoHRE calculates the number of Emiratis according to the overall number of skilled workers in a company.
According to the MoHRE, employers must hire Emiratis for skilled jobs. These skilled workers must fall into one of the following qualifications:
- Hold a certificate higher than the secondary or equivalent to secondary
- Hold a worker certificate that has to be attested by a competent authority
- Earn a minimum salary of AED 4,000 per month
- Fall under one of the following categories:
- Legislators, business executives and managers
- Writing professionals
- Professionals in technical, scientific and human fields
- Technicians in technical, scientific and humanitarian fields
- Service and sales occupations
Challenges facing the implementation of Emiratisation
Since the early 2000s, the UAE government has promoted Emiratisation. Over the past two decades, this process has faced challenges. The most significant of these are:
Skills gap: Many Emirati nationals lack the technical and soft skills required for high-skilled jobs, making competing with foreign national workers difficult.
Limited job opportunities: Emirati nationals may face limited job opportunities in certain industries, which takes longer to overcome the barrier to access for Emiratis.
Education and awareness: Education and training for Emiratis must be enhanced to close the skills gap. This is evident in issues such as language barriers in the workplace, cultural differences, and other areas.
Language barriers: The UAE’s cosmopolitan population means that many foreign workers speak languages other than Arabic, which can create language barriers for Emirati nationals who are more comfortable speaking Arabic.
Cost implications: Emiratisation can be costly for private sector companies without support from the UAE government. Resistance to change: Some private sector companies may resist changing their recruitment and employment practices to meet Emiratisation targets, making it difficult to implement the policy effectively.
Potential impact on the UAE economy and society
The potential impact of Emiratisation in the UAE – and its economy and society – is complex and multifaceted. In terms of the economy, Emiratisation can positively impact the UAE economy and society by reducing the country’s reliance on foreign nationals who repatriate significant portions of their profits back to their home countries. It will also lower the number of unemployed Emirati nationals, especially among the youth, which will help create better social stability and sustainability.
Some have argued that Emiratisation and its programmes are expensive, as they result in increased labour costs that reduce their market competitiveness and profitability. However, overall,
Emiratisation will help close the skills gap between Emiratis and foreign nationals, leading to greater economic opportunities and future growth of the UAE.
Whether they’re powered by Emiratis or foreign nationals, Trade License Zone has all companies covered. No matter what type of business you look to start in the UAE, knowing more about Emiratisation and how your venture can utilise its policies will help create a sustainable business for you and your family and boost the growth of the UAE too.
When looking at how to start a company in Dubai, we help with trade license applications, company registration, and more to help save you time and money and eliminate the frustration of unnecessary delays or rejections.
Getting started is as simple as sending us basic information about your business idea, and our expert team will take care of the rest for you. We’ll manage business setup, communicate with all relevant government departments and authorities, visa amendments and applications, open corporate bank accounts, and report back to you when you’re ready to start trading. It really is that straig