x Abu Dhabi, UAEThursday 27 July 2017

Is this the way to save jobs?

A proposal that would make it harder for private companies to sack or lay off Emiratis may protect the workers in the economic downturn but has the potential to backfire, employment specialists say.

Under the proposal, companies could not terminate Emiratis except in extreme circumstances outlined in existing labour laws.
Under the proposal, companies could not terminate Emiratis except in extreme circumstances outlined in existing labour laws.

DUBAI // A proposal that would make it harder for private companies to sack or lay off Emiratis may protect the workers in the economic downturn but has the potential to backfire, employment specialists say. Tanmia, the training arm of the National Human Resource Development and Employment Authority, submitted the proposal to the Ministry of Labour late last week. Speaking on the sidelines of the Tabadol press conference, Humaid bin Dimas, the ministry's acting director, said: "We are close to an announcement and it will be made through the government news agency WAM."

A source at the ministry said details were expected to be announced today, although there was no word on when the changes might be implemented. According to Feddah Lootah, the acting director general at Tanmia, the companies would be barred from cancelling Emiratis' work contracts except in extreme circumstances outlined in existing labour laws. It also has the wider aim of safeguarding and creating more jobs for nationals as the global financial crisis hits home.

"We are not saying Emiratis cannot be sacked, but to sack an Emirati giving the financial crisis as an excuse is not an option," she said. But some human resources specialists say the proposal will be hard for companies to adhere to, particularly of late. "At the moment it seems to be quite a heavy measure, an additional burden on private companies, if they have taken away from them the ability to restructure if they need to," Michael Kerr, a partner in the firm Denton Wilde Sapte who specialises in employment law, said yesterday.

"I am in great support of Emiratisation, but everything has to have checks and balances." Mrs Lootah noted that Emiratis make up just one to two per cent of the workforce in most companies. Referring to a group of Emiratis who recently filed a complaint with the ministry against Al Futtaim Group for what they said was arbitrary termination, she said: "When we are talking about companies that employ 33,000 people, then tell me how is that going to have a dent on the balance sheet by sacking 30 Emirati staff?"

The case is still under review at the ministry after the employees sought immediate reinstatement. "People have the misconception that Emiratis live on government handouts and that is just not true," Mrs Lootah said. "They still have to pay back loans on their land to the Government. They also have credit from banks like most expatriates and need to be in employment in order to meet their financial obligations."

The proposal also stipulated how private companies could better meet Emiratisation quotas and outlined plans for improved on-the-job training. It further suggests ways of boosting the number of Emiratis working within the public sector and safeguarding the jobs of those who are employed. "Every Emirati hired has a six months probation and notice period. So if there is an excuse of them not performing then why didn't they sack the employee then?" Mrs Lootah said.

"We are the minority in our own country. When we lose our jobs we have nowhere to go, an expatriate has a home to go back to." Several major employers contacted yesterday about how the proposal would affect their businesses, including Nakheel and Al Futtaim, were not willing to comment. HSBC Middle East is already experiencing a mismatch between the rate of growth and its ability to add to the 1,100 Emiratis in its employ, said Ammar Shams, head of human resources.

Although there are no plans for redundancies, any cuts would be made with an eye to the company's policies on Emiratisation and existing labour laws. "As world events unfold, we are not immune from their implications and are making every effort to meet customer demand and shareholder expectations to manage our business as efficiently as possible, but continue to believe that this can be done within the normal parameters of our hiring, turnover and replacement practices," Mr Shams said.

Hakkim al Bannay, the general manager of corporate affairs for ETA Star Group, a Dubai-based business conglomerate that employs 73,000 people in the UAE, welcomed Tanmia's proposal. Mr al Bannay said it would safeguard Emiratis against unjust practices by employers. "This is especially significant in the current economic climate," he said. "Efforts to promote Emiratisation have met with resounding success in recent years and any regression has to be effectively dealt with."

A leading recruitment specialist, who spoke on the condition of anonymity as his employer would not approve of his opinion, said he was "pro-legislation". "Emiratis have to be encouraged into the private sector," he said. "They have to be. People can't forget the fact that we're guests in this country and they are not." However, others said the proposal could ultimately work against Tanmia's goal of getting more Emiratis working in the private sector. If enacted, employers might be reluctant to put Emiratis in positions of responsibility, or lean to hiring on more fixed-term contracts that would not have to be renewed.

Some employers might even be reluctant to hire Emiratis at all, particularly in free zones, said Samir Kantaria, partner and head of employment practice at Al Tamimi and Company, a Dubai law firm. "I think ultimately you can see that the concept of having certain job security for Emirati nationals does make sense, but it has to be dealt with delicately," he said. "It could backfire if the rules are not properly considered."

Patrick Luby, managing director of Manpower/Clarendon Parker Middle East, a recruitment and employment service in Dubai, also felt the proposal might have a "discouraging" effect. "Clearly, the private-sector employer would find it difficult to accept that as a blanket policy," he said. He suggested another way to protect Emiratis in the workplace would be to adopt a model used by several European countries, including The Netherlands. There, companies who need to restructure make their case for laying off nationals to a tribunal operated under the Labour Ministry.

"It's a way to take the personal and emotional sting out of these decisions," Mr Luby said. shafez@thenational.ae rditcham@thenational.ae amcqueen@thenational.ae