Emiratisation – private sector employees must attract and retain the Emirati workforce

Emiratisation, a national agenda to increase Emirati representation in the private sector, is a regulatory requirement that is designed to integrate the national workforce into private sector companies across the UAE.

As part of its ‘We the UAE 2031’ vision, the UAE government has set goals for private sector employment and is investing up to AED24 billion (USD 6.5 billion) to reach a target of 75,000 Emiratis employed in private sector companies by 2026.

With the next six-month deadline – 31 December – fast approaching, UAE authorities are urging private sector companies to comply with the Emiratisation law to avoid penalties starting on 1 January 2025.

Companies with 50 or more employees were required to increase their Emirati workforce by 1% in the first half of the year and another 1% in the second half to achieve a total annual increase of 2%. By 2026, these companies are expected to achieve a 10% Emiratisation rate.

To encourage compliance, from January 2023 non-compliant companies must pay an amount of AED6,000 monthly for every UAE citizen that has not been employed. The value of the monthly contributions increases by AED1,000 annually until 2026.

As of 2024, companies with 20 to 49 employees operating in 14 specified economic activities are also required hire at least one Emirati in a skilled position by the end of the year and retain any Emiratis employed prior to 1 January 2024. From 2025, they are required to hire at least two Emirati citizens.

In-scope firms that are non-compliant will face fines of AED96,000 for each Emirati that has not been hired. This contribution will increase to AED108,000 for companies that have not employed two Emiratis by 2025.

With expatriates accounting for 92% of the UAE population, and 89% of the private sector representation, the imbalance of Emirati representation in the private sector is particularly evident. The Emiratisation initiative is directly aligned with the UAE’s broader economic vision of doubling GDP from AED1.49 trillion to AED3 trillion by 2031.

Considering that the private sector in the UAE contributes more than 70% to the UAE’s annual GDP, the UAE has realised the strategic need for embedding Emiratis into these businesses as a key component of its economic strategy.

Over 114,000 Emiratis are now employed in the private sector, with more than 81,000 having joined since the launch of NAFIS, the ‘Emirati Talent Competitiveness’ programme, which includes reforms and financial incentives to drive work opportunities for both young and experienced Emiratis in the private sector.

While the number of Emiratis joining the private sector is growing year-on-year, with an increase of 36% in 2023 over 2022, reports indicate that UAE nationals often do not stay for a long period of time. With two out of three Emiratis considering a change from the private to the public sector, there is a steep hill to climb.

According to recent research, 20% of Emiratis in the UAE private sector are less satisfied with their compensation and benefits packages than their public sector counterparts. Moreover, 62% of new graduates claim it is harder to secure employment in the private sector, 69% of Emirati graduates believe that the UAE private sector offers less job security, and 50% claim that they face work-life balance challenges.

It is therefore essential for private sector employers in the UAE to ensure that their businesses can not only attract homegrown talent, but also retain and cultivate that talent. Career development and succession planning for their Emirati talent is extremely important because 59% of Emiratis employed in the private sector believe career growth and compensation are the greatest influences on their job preferences.

In this complicated and high-risk environment, employers that successfully embrace Emiratisation can benefit in a number of ways:

• With over two-thirds of Emirati graduates believing that there are better learning and development opportunities in the private sector, employers now have access to Emirati’s entering the workforce with a strong academic background. Equipped with world class education and professional training, they are eager to make meaningful contributions and the majority prefer a more autonomous work environment in which innovation and creativity are encouraged.
• Businesses that actively exceed their targets are rewarded with incentives and government support. These include pension compensation subsidies, access to government contracts and a competitive edge when bidding for public sector projects. The NAFIS programme is designed to help integrate Emiratis into the private sector by offering financial support for employers.
• With 75% of Emiratis preferring to work for companies that prioritise social responsibility and serve a broader purpose, companies that commit to Emiratisation often enjoy a higher brand image than their competitors. This positions businesses as attractive employers and enhances their corporate reputation.
• Emiratis have a deep understanding of local culture, values and business practices, which can give your businesses a competitive edge in the UAE and GCC markets. Hiring Emirati talent in key strategic roles allows you to better tailor your products and services towards these markets and helps meet the specific needs and preferences of local customers.

Private sector employers in the UAE not only face a significant challenge in attracting Emirati talent, but with 67% of Emirati employees wanting to move from the private to public sector, they face an even greater challenge in retaining it. They will need to invest in strategies and technologies to retain their Emirati workforce, and future-proof their business.

For further information, please contact Faraz Ahmed, HR Consultant at Sovereign PPG, below.