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published on 31 May 2022 | reading time approx. 4 minutes
The following provides a brief overview about the latest business, economic and legal news from all around the United Arab Emirates and GCC region.
His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE has passed away last Friday at the age of 73. The Ministry of Presidential Affairs has announced a 40-day mourning period across the country with flags being flown at half-mast and a three-day mourning period where all federal ministries, local government departments and private sector companies suspend their operations starting from 14 May 2022 with work being resumed on 17 May 2022. Leaders from around the world have arrived in Abu Dhabi to pay their respects and condolences following the passing of Sheikh Kahlifa. His Highness Sheikh Mohammed bin Zayed al Nahyan who served as Abu Dhabi’s Crown Prince since 2004 and Abu Dhabi’s de facto ruler as a result of Sheikh Khalifa’s ill health since 2014, has been unanimously elected as the third President of the United Arab Emirates on Saturday 14 May 2022.
New research reports found that Saudi Arabia has more woman working in the technology start up sector than Europe. During the third quarter of 2021 the technology sector saw a participation rate of women of 28 per cent – that is a mere 10 per cent more than the average European participation rate of woman in the tech start up sector which stands at 17,5 per cent during the same time period last year. Moreover, research findings saw the startup rates for women in the tech start up sector in Saudi Arabia even higher than those for men. In 2021 139,754 new commercial licenses were issued to women according to the Saudi Ministry of Communications and Information Technology. The kingdom has one of the largest growth rates globally as this figure represented a 112 percent increase in commercial registrations issued for women entrepreneurs compared to 2015 when only 65,912 commercial registrations were granted to women. The recently published Endeavor Insight report found “Saudi Arabia has the potential to become a regional hub for tech entrepreneurship in the Middle East if more companies reach scale,” referring to progress from small companies to companies with more than 50 employees.
In the first quarter of 2022 the Saudi Arabian economy grew by 9,4 per cent which marks the highest growth rate within the past 10 years as shown by the country’s General Authority for Statistics (Gastat). Crude Oil, natural gas and refining related activity in Saudi Arabia rose by 20,4 per cent supporting the growth of the largest economy in the Arab world. The EU sanctions on Russian oil and gas imports as a reaction to the Russian military offense in Ukraine made oil prices being traded higher as Brent (the leading global price benchmark for crude oils) also has increased more than 30 per cent since the beginning of this year. In addition to the increased oil activity in the kingdom, the Saudi Vision 2030, with its focus on decreasing the country’s economic dependance on the oil sector by diversifying its economy and focusing on private-sector investments as well as talent attraction and retention boosted the kingdom’s economy. Non-oil activity grew by 3,7 per cent during the first quarter of 2022 with Government services activities having increased by 2,4 per cent. “With robust levels of non-oil activities growth anticipated in 2022, we expect further rises in the number of Saudi and expat workers in many sectors”, Jadwa Investment was quoted referring to the unemployment rate among citizens being expected to drop to 10,7 per cent in 2022. “The positive outlook reflects our expectation of improving GDP growth and fiscal dynamics over the medium term tied to the country’s emergence from the Covid-19 pandemic, improved oil-sector prospects and the government’s reform programmes.” S&P Global Ratings Agency was quoted.
Part of the recent labour reforms in the UAE is the announcement of an unemployment insurance scheme which will provide unemployed individuals with financial income support over a limited period of time. It will be available to both expat residents as well as to Emiratis in both the public and the private sector.The Minister of Human Resources and Emiratisation, Abdulrahman Al Awar, has announced that individuals facing unforeseen job loss will receive cash support of up to 60 per cent of their basic salary every month (maximum amount of 20,000 AED per month) for a limited time period until they find an alternative. He was quoted saying “The new insurance scheme aims to ensure stability in the labour market and encourage more Emiratis to enter the private sector.” Domestic workers, employees employed temporarily, juveniles under the age of 18, retirees as well as investors do not qualify for the scheme. The scheme will be effective from January 2023 and different annual packages will be available through insurance companies.
During recent labour reforms the labour market has been made more attractive to foreign workers in order to attract talents from across the world. Nonetheless the government ensures to keep Emiratis as an important part of the work force as the UAE Cabinet had adopted a set of incentives to boost Emiratisation rates in private sector companies. The new Emiratisation rate set by the country is set at a minimum of 2 per cent annually from high skilled jobs in companies employing more than 50 employees. The goal is to however increase this minimum percentage up to 10 per cent b 2026. In this way more than 12,000 jobs can be created for Emiratis across all economic sectors. Private sector companies who employ more than the set Emiratisation target can enjoy several incentives such as a reduction in service fees at the Ministry of Human Resources and Emiratisation of up to 80 per cent. On the other hand, in case the Emiratisation target is not met a non- compliance fee of 6,000 AED per month per every vacant citizen position will have to be paid. The non- compliance fee will apply from January 2023 onwards. Moreover, the federal so-called ‘Nafis’ scheme that regulates the boost of Emirati workforce in the private sector, works with a salary support scheme offering Emiratis a one-year salary support of up to 8,000 AED per month during training. Pension plans and child support will also be put into place.
Nicola Lohrey
Managing Partner
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