The Unemployment Insurance was announced this month by the Vice President, the Prime Minister of the UAE, and the ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum. Human Capital experts believe that the new unemployment insurance program will provide a safety net for ex-pat and Emirati employees in the UAE’s governmental and private sectors to prevent poverty and hardship in the country. According to Sheikh Mohammed’s post on Twitter, this scheme aims to protect employees during a jobless period for a limited period. It will increase labor market competitiveness, offer a social safety net for its employees, and create a stable work environment.

The Unemployment insurance payments might vary between 40 and 100 dirhams each year, with the plan covering 60% of the worker’s basic wage for a certain amount of time, i.e. until they find another job. The scheme will come into effect by 2023, employees will be paying their fees to insurance companies, and the private insurance companies will be the ones to provide the coverage.

The Unemployment Insurance scheme in UAE was built on Economic Policies that resulted in the Expo 2020

The UAE’s economic policies have always been a result of looking for opportunities for growth and advancement from its policymakers and this unemployment insurance scheme is one of the latest set of reforms introduced by the country to further advance in the business world. Moreover, it comes after an array of policies such as Golden Visas and Job Seeker visas.

The Head of Investment for MENA Equity at Franklin Templeton, Salah Shamma, said: “These reforms should support long-term economic growth by attracting new entrants into the market seeking to set up businesses or find employment in the emirates, all while increasing the stickiness of the existing workforce and by extension, overall population growth. He further added that they expect the improved flexibility and mobility in the labor force, low tax rates, and the enhanced economic fundamentals to strengthen UAE’s place in the world as a lucrative hub to live, work and invest.

The Unemployment insurance Scheme in UAE will help Businesses and the Economy

Employers will gain from the unemployment program as well, as it will promote the smooth and effective functioning of the labor market for Emiratis and foreign employees equally, making the UAE a more appealing place to work. Dr. Ali Saeed Aldhaheri, Chairman of Watania, explains that this move is part of the government’s plan to expand the insurance market where both the government and private insurance industry are committed to bringing innovative new concepts and solutions to fulfill the changing demands of the insurance market for individuals and companies. Extensive insurance coverage across a wide range of activities is expected to support effective economic development and growth.

The economic policies that culminated in the hosting of Expo 2020, had begun way back in 2014 and will continue in the coming years too and as the UAE economy grows further and solidifies its place in the World Economy. We can expect an influx of fresh talent to the country before the end of the year and experts like Salah Shamma guarantee the same. The Minister of Human Resources and Emiratisation Abdulmannan Alawar has stated that the implementation of the new law will be a watershed moment in the UAE’s business environment. Moreover, it will enable national talents and competencies, strengthen partnerships with the private sector, increasing the attractiveness of the UAE labor market and its ability to attract local and international talent through these incentives and safety nets that support healthy and sustainable economic growth.