x Abu Dhabi, UAEFriday 21 July 2017

A labour market with no objections

The days of the dreaded "no objection" letter and "visa runs" could very soon be coming to an end.

The days of the dreaded no objection certificate and "visa run" could very soon be coming to an end. The debate over the pros and cons of the UAE's sponsorship system has once again been thrown into the spotlight. In the Federal National Council, Yousef al Neaimi, a member from Ras Al Khaimah, has argued that the system could be streamlined, but sudden changes risked causing "chaos" in the labour market.

Saqr Ghobash, the Minister of Labour, maintains that he will not abandon what he sees as a worthwhile system. At the same time, he acknowledges that it is in need of an overhaul.

"When the contractual relationship ends between the two parties, logic dictates that each party becomes free in determining the new relationship they want to enter into," Mr Ghobash wrote in a letter to the FNC this week.

Both Bahrain and Kuwait have experimented with abandoning the sponsorship system, with varying results. It is a complicated issue involving the labour market, immigration and the domestic economy. As such, the UAE can learn its neighbours' lessons, even if it does not apply their solutions wholesale.

Mr al Neaimi is right to bring the issue to the Ministry's attention - the system is distorting the economy. But a partial revision of the system might be the best solution. A more fluid labour market would benefit expatriate workers but also the economy as a whole. As we reported last month, the bureaucratic delays that no objection certificates entail have meant that many companies prefer to hire from abroad when it should be far cheaper for them to hire locally. A relaxing of the requirements would mean far less paperwork and waiting time for expatriates changing jobs.

Supporters of the present system say that abandoning it could adversely affect the chances of Emiratis to find work in the private sector. But if done correctly, and in concert with other programmes, relaxing requirements would stimulate the economy and actually create jobs.

Mr Ghobash has already said that the sponsorship system will be reformed - the scope of those reforms and the fate of the no objection certificates are now being debated. There is no need to jump headlong into a new regimen but after careful consideration, we hope that the Ministry of Labour can find a way to reduce red tape while still protecting national priorities.