The voluntary savings system launched late last year could help companies attract the best talent. It can also raise employee loyalty and satisfaction levels, and increase productivity at work.
Moreover, it could replace end-of-service benefits at some point in the future, revealed Asma Al Madani, Acting Director of the Policy and Studies Department at the Ministry of Human Resources and Emiratization (MOHRE).
“The medium-term cost paid by the employer if he participates in the savings scheme is less than the cost of the current end-of-service gratuity,” she said. “Companies can then focus on their commercial activities as well as development and capital building rather than operational matters in managing and disbursing end-of-service benefits.”
She said this would also help employers to attract the best talent. “The savings scheme would raise employee loyalty and satisfaction levels, and increasing productivity at work.”
Her comments came at the session exploring the future of work on the sidelines of the World Governments Summit (WGS) 2024. At the opening of the session, Dr. Abdulrahman Al Awar, Minister of Human Resources and Emiratization said it was a priority for governments to set clear and calculated strategies for the future of the labor market. “We live in a new world shaped by technologies,” he said. “This makes it we have new approaches to the labor market.”
Voluntary scheme
The savings scheme, which began in November 2023, is open to employees working in the public and private sectors, and free zone entities. If employers decide to sign up for the programe, they can specify the staff members who will be part of it. Emiratis can also subscribe to this voluntary scheme.
“Employers can sign up their workers for it, irrespective of their professional levels,” she said. “It offers many benefits like sound financial planning and a sense of ownership to the worker. There is also the possibility of increasing the end-of-service reward for a skilled worker if he chooses to invest in portfolios with high returns.”
The employer’s basic subscription amounts in this system are calculated in accordance with the labor regulation law for employees of the private sector. For those who have worked for less than five years, it is 5.83% of the basic salary. Those who have worked for more than five years, will have their savings calculated 8.33% of their basic salary. The amount is based on the employee’s monthly salary and cannot be deducted from their wages.
Social protection
Asma further said that the UAE focuses on providing a comprehensive social protection system to employees in order to continue attracting talent and provide them with the necessary protection.
“Since 2021, over 40 laws have been enacted and 60 policies crafted to create a legislative framework for employees,” she said. “This is one of the reason why UAE continues to be one of the top choices to work in globally.”
She revealed that almost 99 percent of employees were covered by medical insurance. “This insurance covers the repatriation of dead bodies, work injuries, diseases and more,” she said. According to her, ever since Mohre developed an integrated system to solve legal disputes over dues amounting to less than Dh50,000, they were able to resolve 81% of them amicably without reaching the courts.
“The UAE also implemented the wage protection system in 2017,” she said said. “Over 92% of employees are covered by it. The unemployment insurance introduced in 2023 has over 6.8 million subscribers.”