UAE AT THE CROSSROADS

VENU MENON
Consulting Editor

The rush among the expatriate population to leave the UAE just when the country is lifting restrictions and reopening its economy in the wake of the coronavirus pandemic is confounding at first. But a closer look explains this apparently contradictory trend.
At the core of the exodus of the expat workforce is the new COVID-19 law enacted by the Ministry of Human Resources and Emiratisation (MoHRE).
Special Resolution 279 adopted by the UAE government sets out the terms and conditions for employers to lay off their workforce under the Covid-19 emergency. Employers are empowered to lay off staff without pay, though dismissed employees cannot be evicted from their accommodation and must be given time to find other jobs or to leave the UAE.
While the new law is aimed at protecting investors from the economic backlash caused by the pandemic, it provides little incentive for employees to stay on in the country. The mass exodus of foreign residents will likely result in the overall population of the UAE shrinking by 10%, according to authoritative estimates.
While Indian, Pakistani and Afghan low-income workers are leaving in droves on repatriation flights back to their countries, it is the outward bound middle -class residents that will affect the economy the most. Restaurants, luxury good retail outlets, schools and clinics will feel the pinch as people leave. The lack of a safety net is driving long-term residents of Dubai to return to their countries of origin such as Australia, the UK, and the US. These foreign residents are eyeing the advantage of medical insurance and free schooling that those countries offer to their citizens.

Business owners are hopeful that the UAE government will come up with a stimulus package with measures comparable to those adopted by developed economies, such as the UK, New Zealand and the US.
The UAE’s long-held policy is one of balancing its need for an expat workforce to build the country’s economy with that of prioritising its Emiratisation programme of providing jobs to its citizens. Foreign residents comprise around 90 per cent of the total UAE population of 9.6 million.
The UAE government is not actively encouraging expats to leave in the way that other Gulf states such as Kuwait and Oman are. Indeed, the government has granted amnesty to overstayers by extending expired visas and residency permits by an additional six months (up to the end of the year), though the move has done little to stem the exodus of the expat workforce.
At the same time, the government appears to be withholding substantive support to employers. This indicates that the UAE government wants to preserve its cash reserves to sustain its long-term policy of providing benefits to its own citizens in the future, especially in the wake of plunging oil prices.
The UAE finds itself at a crossroads in the wake of the COVID -19 pandemic. The country must resolve the contradiction of having to draw more crowds into its malls, with a shortage of staff to man the shop counters and little or no buying taking place.