Friday, September 09, 2005

Labour Ministry to monitor category A companies :: GN

Measurement is a central difficulty in enforcing a quota. The problem has plagued enforcement of Emiratization rules that require that a minimum per cent of company's work force be UAE nationals. In the last months, the government has put in place incentives to encourage compliance. Now it is moving forward on monitoring:

Since July 23, companies that ensure at least 2 per cent of their work force are UAE nationals, enter category A at the ministry. That category pays the least on transaction fees and does not have to hand over bank guarantees for each worker.

Companies that must emiratise cannot enter category A unless they fulfil government-set quotas.

To obtain category A status, companies must prove they have hired a UAE national for six months or more, by providing a certificate from the UAE Pension fund, or the Abu Dhabi Pension fund.

However, Ahmad Kajour, Assistant Undersecretary for Planning at the ministry, said no system exists in the ministry to check whether companies are hanging on to the UAE nationals they hire after six months and after obtaining category A status.

Kajour said a new programme, to be installed next month, would allow access to the two funds' information.

Companies employing UAE nationals will have to obtain a specific work contract for them from typing centres. The UAE national's details will be recorded and assigned a specific number. The same information will go to the fund the company pays the UAE national's retirement benefits.

"Automatically, if a company lets go of a UAE national, or he resigns, and [the company] cuts off payment to the fund, we'll know."

Kajour said the system would be in place by October. He said there were concerns companies would exploit information gaps to pay less.

The goal of the government is to increase employment of nationals in the private sector. The percentage in the private sector is tiny (see the reference to 2 percent in the quote above) and most nationals who are working are working in the public sector. The reason is that private sector salaries are driven by the salaries that non-nationals could earn in their home countries and these salaries are not attractive to nationals. The recent increase 25 percent increase in salaries for nationals working in government amplified the effect. At the same time, the country enjoys the benefit of imported labor so the government is not contemplating reducing the ex pat labor force in order to drive up wages making employment in the private sector attractive to nationals.
Harnessing the monitoring system to the retirement benefit system for nationals the UAE makes sense.

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