UAE mulls worker unemployment insurance

Following significant relaxations in movement of expatriate labour from one job to another, the UAE may soon have a migrant savings scheme which will allow such workers to extra funds [apart from gratuity] to rely upon during the time they spend in-between jobs.

Another scheme under consideration is an unemployment insurance scheme to encourage nationals to find employment in the private sector.

The UAE Minister of Labour Saqar Ghobash said that the ministry is considering various schemes for the social protection of expatriates working in the country.

He added that its immediate focus remains, however, on enforcing the current end-of-service scheme and protecting the worker against non-compliance or default by the employer.

Currently, UAE law mandates that guest workers be paid an end-of-service lump sum equivalent to approximately one-month pay for each year of service.

The UAE commissioned a study on social protection for temporary contract workers, the findings of which were presented at the 2010 Global Forum on Migration and development in Puerto Vallarta, Mexico.

The study's conclusions confirmed that the average length of stay by a guest worker, and his/her level of compensation, are two key factors that need to be taken into account when looking at alternatives to an end-of-service scheme, Ghobash noted.

It offered a number of suggestions including tying transition to a contributory system to length of residence, and the creation of a Migrant Savings Account that can help sustain the guest worker in-between jobs as rules on mobility have recently been significantly relaxed by the Ministry of Labour.

"Our Ministry is considering these various schemes; its immediate focus remains, however, on enforcing the current end-of-service scheme and protecting the worker against non-compliance or default by the employer," stressed Ghobash.

Addressing Session 2 of G20 Labour and Employment Ministerial Meeting currently underway in Paris, Ghobash argued that UAE's present efforts to strengthen social protection are not strictly aimed at shielding the national workforce from shocks associated with cyclical economic downturns: "They rather aim at aligning employment conditions across sectors so as to encourage employment in our private sector," said the minister.

Session 2 is on 'Improving social protection for all: different situations but common human challenges'.

"Earlier during our first session, I explained why the challenges the UAE faced with respect to promoting the employment of its nationals were not strictly a fallout of a down-cycle in economic growth; rather, they were rooted in longstanding barriers to the employment of our nationals in the private sector that could only be dealt with through short and medium term active labor market programmes and interventions on the one hand, and policies aimed at shifting job creation to targeted sectors in conjunction with reform of our civil service, on the other."

He explained that "there are two key policy reform areas we are focused on in pursuit of this objective: One: our current pension regime is already robust enough by global standards, offering both generous retirement income levels and early retirement options. The challenge we face is that portability of benefits is currently hampered by certain access barriers to civil servants who consider shifting to employment in the private sector; we're looking into ways to minimise or eliminate these barriers.

Second: public sector employment offers a significant advantage to employment in the private sector in the fact that it offers a significantly higher level of job security. Coupled with alignment-seeking public sector reform, the UAE Ministry of Labour is currently looking at creating an unemployment insurance scheme that offers an added measure of security and, hence, incentive to UAE nationals to seek and accept employment in the private sector.

The notion of a raised social protection floor may be more relevant to the situation of expatriates working in the UAE. Overwhelmingly, the latter are contract workers who typically reside in the country for a relatively short time and subsequently return to their countries of origin after the contractual period, Ghobash said.

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