Emiratisation: A story of distrust, quotas and a ‘Sandwich-Gate’ controversy

An Emirati business owner was (potentially) liable for AED 4 million in fines after hiring 43 of his own relatives for fake positions in his company. The Ministry of Human Resources & Emiratisation (MOHRE) warned employers resorting to what it termed as ‘fake Emiratisation’ of legal action after noticing a number of violations.

There have also been complaints from UAE nationals who observed that now that the government’s ‘wage-subsidies’ program has come into effect, some employers are purposely reducing the salaries originally budgeted for Emiratis roles. A week ago, a job advert was the subject of controversy. I call it the “sandwich-gate” controversy after a regional company representing a global franchise advertised careers as ‘sandwich makers’ for Emiratis as part of their ‘commitment to Emiratisation’.  This triggered debates between Emiratis and expats around issues such as entitlement, the commitment of private sector employers among many others.

The fact that these incidents have all happened in the past one month is mind-blowing. Especially given the fact that the issue of Emiratisation, and the UAE government’s pursuit to once and for all find a comprehensive resolution to this elusive problem has been on the agenda for at least the past 20 years.

So what is the reason behind the recent spike in issues around Emiratisation in spite of the government’s increased efforts? What really are the underlying issues that need to be addressed? And what can companies do today to not only avoid falling behind in ‘quotas’ and fines, but also capitalize on the opportunities at hand. 

How it all started

MOHRE announced earlier in 2022 that private sector companies across the UAE based in the country’s mainland will now have to conform to a ‘quota’ system which will be mandatory for all private sector companies that employ more than 50 staff.  Under this new quota system, employers will be required to hire no less than 2 percent Emiratis every year for ‘skilled roles’ within the company. This target is cumulative and will be imposed every year till the company reaches a target of 10 percent by 2026. The Ministry also gave employers a deadline till the end of each calendar year to submit a report of the nationals hired and show that the targets are achieved. Failing to do so will result in penalties, mainly a fine of AED 6000 per month for each position not ‘Emiratized’.

HR heads, recruitment managers and decision makers either expressed their frustration of what they deemed as a “surprise” law that couldn’t have come at a "worse time” or concerns about not being able to achieve these targets on time because in their own words “everyone knows that convincing nationals to work in the private sector is extremely challenging”.

Why now?

If you’ve lived in the UAE long enough, you will know that ‘Emiratisation’ is probably one of those topics that stir heated debates among locals, as well as between locals and expats. The slow progress made in finding an effective resolution to this long-standing challenge is unimpressive to most nationals, and a look at the sentiments shared by Emiratis and even government policymakers in public or in person will show you that there is a general mistrust of not only the sincerity of the private sector to employ nationals, but also the futility of some of the initiatives historically rolled out by government authorities.

In response to this, the UAE government decided in the last one year to tackle these issues by gradually deploying what I consider as a two-pronged approach.

The first one would be to motivate and reward employers through a series of incentives and subsidies announced in 2021 as part of the country’s ‘Projects of The 50’ initiatives. These incentives would predominantly target private sector companies looking to hire Emiratis, while some of the incentives were introduced to support Emiratis currently employed or seeking employment in the private sector. The responsibility of overseeing how these subsidies and incentives would fall under a newly formed government agency known as ‘The Emirati Talent Competitiveness Council, NAFIS (which literally means to compete in Arabic). NAFIS is a federal government agency, this is important to know because, just like MOHRE, its jurisdiction includes private sector companies operating across UAE’s mainland (these are onshore companies).

It’s important to note that the quota system imposed on private sector companies and companies operating in the banking, Insurance and financial industries are somewhat different. While private sector companies are required to achieve the number of skilled Emirati workers, the banking sector has a more complex system to follow, known as a ‘points system’. I consider the points system as a basis of what I would refer to as Quality Emiratisation, a system that takes into account more than just number of hires achieved.

While companies operating from the various free zones are for the time being not required to register with NAFIS in order to avail the incentives offered, this does not mean companies choosing to voluntarily register themselves cannot do so. In my view, this also does not mean that the exclusion of free zone companies will remain so indefinitely. The second of the two-pronged approach would come in the form of penalties imposed on companies that do not meet the allocated quotas and targets as I had described earlier.

Are Emiratis prepared to work in the private sector?

The short answer is ‘Yes’ and ‘No’.

While there are Emiratis prepared to work in the private sector, open to accepting salaries lower than those offered in the public sector and the longer working hours, others need more convincing.  The majority of the private sector has isolated itself from the commitment to interact and ultimately hire nationals.  The dynamic between these companies and national communities is in most cases driven by commercial self-interest and making the most out of their presence in the country. This is understandable, but not a sustainable for any economy that is keen to achieve ambitious goals in the areas of competitiveness, cohesiveness and security.

In my view, the onus is on the private sector employers to find more strategic and creative ways to attract and engage national talent.  This shouldn’t come as a surprise, in a world where Gen Z’s and Millennials are expected to represent 75 percent of the workforce, employers competing for talent must be aware that attracting and engaging this segment requires an approach that speaks to their attitudes and preferences. This certainly does not include being treated as a number to fill a quota in a role that provides no clear career progression or value.