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UAE Says Sponsorship for Foreign Workers Is Here To Stay

UAE : 13 October 2010

The UAE has plans to create a solid economy based on knowledge over the next decade and will stick with the sponsorship system currently in place.

The Minister of Labour stated his support for the current sponsorship system and insisted that solutions to the challenges of implementation need to be found, as opposed to simply abandoning the system.

Saqr Ghobash Saeed Ghobash spoke at a workshop brought together by the Dubai Economic Council and the Ministry of Labour covering salaries and labour costs in the UAE.  His comments came only two weeks after the announcement that Kuwait will bring its sponsorship system to a halt in February 2011.

The sponsorship regulations state that foreign workers need to acquire the endorsement of a local sponsor to come into the country, begin work and change jobs in the UAE.  Bahrain began to allow expats to switch employers without sponsor approval in 2009.

The minister stated that the UAE sponsorship system is legal, good for the country and follows after the systems in many other nations.  It was clear that he does not support scrapping the system, but understands that practices within the system need to be amended.

He stated that there are certain sponsorship system practices that could be incorrect.

Minister Ghobash said that employee exploitation over extended periods of time should not be happening with the system and that provisions need to be reestablished.  He stated that an open dialogue about system practices should be implemented.

The minister also noted that a flexible sponsorship system should close the wage gap between nationals and foreign workers.

He stated the Emiratisation has been difficult over the past few years due to shortcomings and wage differences, especially within the public sectors of Abu Dhabi and Dubai.

A stronger partnership between the private sector and government is needed and local universities should also increase their contributions, in efforts to encourage the local workforce within the labour market.

The federal government has a vision for 2020 that finds a solid knowledge-based economy in the UAE.  To reach this minister Ghobash said that the imbalances found by unskilled and skilled workers coming into the nation need to be addressed and that the Emiratis should have an increased role in government as well as in the private sector.

Chief Economist Dr. Abdulrazak Alfaris of the Economic Policy and Research Centre of the Dubai Economic Council stated that the sponsorship system could be tweaked to allow for more flexibility that will draw more skilled labour into the market.

In Bahrain, the chairman of the Economists Association Doctor Ahmed Al Yousha stated abolishing the sponsorship system has added fairness to the job market.  He also noted that further regulations are in place to monitor worker mobility.


UAE Spends Dh 500 Billion on Social Programs for Expats

A study reported that Dh 500 billion is spent annually by the UAE government on indirect social programs aimed at the foreign workforce in the nation.

Conducted by the Director of the Institute for Social and Economic Research at Zayed University, Doctor Mouawiya Al Awad, the study stated that the overall social costs are estimated at Dh 14,066 per foreign worker.  This includes costs such as energy subsidies, social security, infrastructure and public services.  Since each foreign worker pays Dh 2,507 on average for annual government fees, the average annual cost for social services totals Dh 11,559 for each expat worker.

The study did not take the social costs for domestic workers into account and noted that 80 per cent of the foreign workforce within the private sector (totaling 4 million workers) was considered unskilled workers.  There is an administrative and recruitment cost of approximately Dh 2,674 annually per worker, which breaks down to Dh 3,404 for each skilled labourer and Dh 2,296 for each unskilled worker.

Because an additional Dh 22 billion annual investment is necessary to reach the government goal of an economy based on knowledge and bring the unskilled to skilled worker ratio to 40:60, Dr. Al Awad stated that the private sector needs to bear more of the costs and form solid partnerships with the government.

Details of the UAE workforce survey done in 2009 were commented on by Dr. Roaslia Vazquez-Alvarez, the economic adviser for the Economic Policy and Research Centre of the Dubai Economic Council.  The study involved 21,000 respondents in more than 7,900 households.  Dr. Vazquez-Alvarez noted that 77 per cent of foreigners are employed while only 56 per cent of Emiratis have work.  The jobless rate within the nationals sits at 31 per cent and falls to seven per cent within the expats surveyed.  The balance within the sample group was housewives.

Dr. Vazquez-Alvarez noted that pay levels were not where they should be for those with a higher education and more experience, especially within the Emiratis group.  These discrepancies discourage young people from moving into higher education levels in order to obtain better positions and more benefits at the workplace.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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