UAE Unemployment Insurance Scheme

The United Arab Emirates (UAE) recently introduced an unemployment insurance scheme, becoming the first country in the Gulf Cooperation Council (GCC) to do so. The scheme, called the "Unemployment Insurance System," was launched in October 2021 and aims to provide financial support to UAE citizens who have lost their jobs.

Under the new scheme, eligible UAE citizens who have worked in the private sector for at least one year and have lost their jobs due to reasons beyond their control, such as company bankruptcy, can receive up to 80% of their last salary for up to 12 months. In addition to financial support, the scheme also offers jobseekers access to training and employment programs to help them find new job opportunities.

The introduction of the unemployment insurance scheme has significant implications for strategic HRM in the UAE. Firstly, it demonstrates the government's commitment to supporting the local workforce and improving their overall welfare. This can help to boost employee morale and loyalty, which can lead to a more engaged and productive workforce.

Secondly, the scheme can help to reduce the financial burden on employers who may have previously had to provide severance pay or other benefits to employees who were let go due to circumstances beyond their control. This can help to reduce costs for businesses and create a more stable business environment, which can ultimately benefit the economy as a whole.

From a strategic HRM perspective, the introduction of the scheme can also help to improve the UAE's attractiveness as a destination for skilled workers, as it provides an additional layer of job security for potential employees. This can help to attract and retain talent, which is critical for businesses to remain competitive in an increasingly globalized economy.

However, the scheme also presents some potential challenges for HR professionals. For example, employers will need to ensure that they comply with the eligibility requirements for the scheme, which may require additional administrative work. Additionally, HR teams may need to develop new policies and procedures to manage the potential impact of the scheme on their recruitment and retention strategies.

Overall, the introduction of the unemployment insurance scheme in the UAE is a significant development that has the potential to positively impact the country's workforce, businesses, and economy. While it may present some challenges for HR professionals, it also provides an opportunity for them to demonstrate their strategic value by developing and implementing policies and procedures that align with the organization's overall goals and objectives.

One potential challenge for HR professionals is ensuring that employees are aware of the scheme and how to access it. This will require effective communication and education programs, as well as collaboration with government agencies to ensure that the application process is clear and straightforward.

HR teams will also need to consider the impact of the scheme on their talent management strategies. For example, the availability of unemployment insurance may lead to more job mobility among employees, as they may be more willing to leave their current job in search of better opportunities knowing that they have a safety net in case they are unable to secure a new position right away. HR teams will need to consider how this could impact their recruitment and retention efforts, and adjust their strategies accordingly.

Another potential challenge is ensuring that the scheme does not disincentivize work. While the financial support provided by the scheme may help unemployed individuals meet their basic needs, it may also reduce their motivation to find new employment. HR professionals will need to work closely with government agencies to ensure that the scheme is designed in a way that encourages individuals to actively seek out new job opportunities and engage in training and development programs to improve their skills.

Summing-up, the introduction of the unemployment insurance scheme in the UAE is a positive step forward for the country's workforce and economy. While it may present some challenges for HR professionals, it also provides an opportunity for them to demonstrate their strategic value by developing and implementing policies and procedures that align with the organization's overall goals and objectives. By working closely with government agencies and other stakeholders, HR teams can help to ensure that the scheme is effectively implemented and that it delivers the intended benefits to employees and businesses alike.

Ahsan Tariq
Department of Management Science 
Preston University
Reg#1093-114118