December 21, 2022

Everything You Need To Know About The New Penalties in UAE for Failure at Emiratization

Emiratization, a program to encourage businesses to hire more citizens of the United Arab Emirates in UAE-based firms, has existed in some capacity in the UAE since 2006. New objectives will go into action in January 2023, along with sanctions for not meeting them.

Over the years, several programs have been launched with the goal of ensuring that private-sector businesses recruit and hire Emirati citizens for their workforce.

The new policy’s components

By December, businesses must have at least 2 percent of UAE manpower in accordance with the new Emiratization Plan. The projected ratio rises after the end of 2022, calling for 4% of the labor supply to be made up of Emiratis by the end of 2023. The desired percentage rises to 6% in 2024, 8% in 2025, and 10% in 2026 when Emirati nationals must make up 10% of the workforce.

By looking at the demographic distribution, the UAE is home to close to 10 million people. But only 11% of the population is made up of citizens of the UAE labor supply. In essence, the goal of Emiratization is to increase the employment of UAE citizens.

What are the penalties for non-compliance?

The businesses that won’t adhere to the new Emiratization standards will be liable for penalties after January 2023, which is a crucial component of the new policy.

The penalties are raised annually. The penalty will be 6,000 dirhams ($1,634) in the first year, and then it will rise by 1,000 dirhams ($272) annually after that. By 2026, the penalties will increase to 10,000 dirhams ($2,723) per month.

How about incentives for companies who comply?

More than the penalties, there are incentives for businesses to hire more Emiratis, such as financial aid for private institutions and UAE citizens.

Overall, the proposed quotas and sanctions will help increase the number of Emiratis working in the UAE. It is a wise decision that will facilitate the workforce integration of UAE nationals and serve as a catalyst for increased investment and population diversification. There is no doubt that it could result in a more diverse workforce.

What should companies do?

Companies should start developing short- and long-term plans to satisfy the quotas if they haven’t already done so.

Do they currently have any open positions for which they are hiring, and are Emiratis qualified to fill them? What other options do they have to ensure they increase the Emirati population by the end of this year if they have no existing positions?

Businesses that have previously established a solid Emirati employment base would find it easier to adapt to the new quotas. Other businesses will need to devise strategies for routinely hiring and keeping Emirati staff.

For many businesses, it will mark a significant shift in how they approach and draw in Emirati candidates. Not only will acquiring fresh Emirati talent be crucial to an organization’s strategy but also keep hold of current Emirati employees who may be persuaded to leave by rival businesses hoping to boost their own quotas.