Major Change in U.A.E : the introduction of the Unemployment Insurance.

Major Change in U.A.E : the introduction of the Unemployment Insurance

It will be open to all workers regardless of nationality - according to Abdulrahman Al Awar, Minister for Human Resources and Emiratisation.

Employees in UAE will have access to unemployment insurance from 2023, applying to both private and public sector employees. The Minister for Human Resources and Emiratisation Abdulrahman Al Awar formally announced the insurance scheme on the 12th of May.

The new measures follow cabinet discussions on Monday 9th headed by UAE Vice President and Prime Minister, and Ruler of the Dubai Emirate, Sheikh Mohammed bin Rashid Al Maktoum. During these discussions, the cabinet approved the unemployment insurance to act as income support for residents for a short time while they seek new opportunities.

Who Is Eligible?

The new unemployment insurance scheme is designed to strengthen job market competition, and to act as a social security safety net for workers who lose their jobs. Such losses are sad but inevitable, and so the system aims to create a stable work environment for everyone affected.

Al Awar stated that it will be open to all employees in both the private and the public sector across the UAE. It is available to them for a short period, until they find a new job, and regardless of nationality. Some are not eligible for the scheme, however. Temporary contractors and domestic workers are those currently unable to take part. Further, retirees with a pension but who also currently work may not take part, neither will anyone under eighteen, or investors currently residing in the country.

According to Al Awar not only will the system bring stability but will also attract talented workers to the UAE.

Further Details on the UAE Unemployment Scheme

The scheme begins in 2023. From then, current employees will be required to contribute a small part of their pay into unemployment insurance through a dedicated insurance provider. The payments will be yearly, a small amount of their pay, and to a plan suitable for both the worker and the insurance provider.

Awar claimed that a typical annual unemployment insurance payment would be between Dh40 and Dh100.

From this, any employee who loses their job will be entitled to 60% of their basic pay for a short time until they find new work. So far, no details have emerged on how long such payments might last.

Describing it as a “safety net” Awar said that final details are yet to be set out; they will be announced through 2022.

This innovative self-funding scheme is expected to attract high-quality employees with the skills and talents to the UAE. Another intended consequence is trust building across all workplaces. Long-term, it should lead to an economic boost as the burden of paying unemployment moves away from businesses and into the insurance safety net.