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Abu Dhabi: Inclusion of expatriates into a federal pension scheme could benefit the UAE's economy and at the same time top up expats' end-of-service benefits, private sector employers say.
Businessmen are calling for the participation of the Ministry of Labour in the process, and the amendment of the federal law that entitles the employee or worker to end-of-service payments from the employer.
"The employer can end up with a double bill if this is not appropriately addressed," said Ali Al Ameri, chairman of Al Shamoukh Oil Services Group.
"Any draft law suggesting the transfer of the end-of-service payment of expatriates to Gapsi (General Authority for Pensions and Social Insurance) must clarify some problematic issues related to the duration of service, which entitles the employee to 21 days of basic salary for each year in service if it is less than one year, and a full month if it exceeds one year, as highly paid employees will end up with a higher payment than what they are rightly due," he added.
Special account
Many businesses in the UAE allocate a special account for the end-of-service pool where they place all the due payments for every worker each month, and transferring these funds to a different account will not be problematic.
"Yet the rights of the two parties, employer and employee, must be ensured in any new regulation. It must also take into consideration the instabilities of labour market's conditions due to the scarcity in some specialisations, and the exit of the illegal labour without an existing alternative," Al Ameri said.
At present, pensions in the private sector are provided through an end-of-service payment (gratuity) relative to the employee's length of service calculated on basic salary.
More than 80 per cent of the UAE's five million inhabitants are expats and do not come under the national pension scheme. Their end-of-service benefits, if structured and invested properly, could not only top-up the amount, but could play a greater role in the country's economy, analysts say.
In numbers
Integral part of UAE
Expatriates constitute more than 80 per cent of the UAE's workforce, serving in the different sectors of the economy.
There are about 5.1 million expatriates working in the UAE, of which 3.1 million are in the private sector.
Asians constitute about 75 per cent of the total, with India accounting for more than 50 per cent of that number, followed by Pakistan.
Arabs constitute about 11 per cent of the workforce.
The total value of expatriates' annual remittances represents six per cent of the country's gross domestic production (GDP), one of the highest in the world, and is estimated at $20 billion according to official sources, while unofficial sources set that figure at $40 billion.
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