New job rules to lure Emirati graduates to SMEs

Abu Dhabi University

• UAE widens pool of private sector companies subject to Emiratisation
• Just 4% of UAE nationals work in private sector 
• Two-thirds of private sector employees consider return to public jobs

The UAE has expanded its rules on Emiratisation as it seeks to give Emirati graduates more opportunities to join small to medium-sized enterprises, which provide jobs for more than 86 percent of the private sector workforce.

A government resolution widens the pool of private sector businesses subject to Emiratisation – an initiative to employ its own citizens.

It aims to get more nationals working outside of the public sector, traditionally the main employer of locals.

Under new regulations announced last week by the Ministry of Human Resources and Emiratisation, firms with 20-49 employees in specific sectors must hire at least one Emirati next year and another in 2025.

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Penalties of AED96,000 ($26,140) will be imposed in January 2025 on firms that do not comply in 2024, increasing to AED108,000 in January 2026. 

Around 79,000 UAE nationals work in the private sector, estimated at only 4 percent of the total workforce. 

Numbers have grown rapidly since the end of 2022 when the figure stood at 50,228.

Nearly 17,000 private sector companies employ UAE citizens. By 2026, authorities want 10 percent of the workforce to be Emiratis.

“This will allow UAE graduates to learn and develop their talent in businesses which are generally more agile, hands on and entrepreneurial than multinational companies,” Neil Wilson, director of strategy and commercial at Creation Business Consultants, told AGBI. 

However, he said that “a lot of SMEs will undoubtedly find it difficult to source Emiratis that have the exact skills and experience that a business may require, given there is a rather limited supply”. 

“It is yet to be seen how this hurdle will be overcome in relation to resources and available skill sets, but it may require flexibility from both sides,” Wilson added.

Targeted sectors include communications, financial and insurance activities, real estate, administrative and support services, arts and entertainment, mining and quarrying, education, healthcare, construction, retail, hospitality and transportation and warehousing.

Khaled Bin Braik, Emiratisation programme leader at PwC Middle East, said the introduction of targets on smaller firms is a “natural progression”. 

“This new mandate will serve to nurture national talent and institutionalise the entrepreneurial, innovation and risk-taking mindset within them,” he said.

“It will further their prospects for self-employment while enhancing the contribution of small and medium-sized enterprises to the country’s economy.

“These impositions have intensified the war for talent as private employers are aggressively trying to recruit and retain national talent in the long term.

“Smaller organisations should view this as a competitive advantage and a window of opportunity to secure the best and brightest.” 

The decision will be implemented alongside the rules for companies employing 50 people or more which are required to achieve 1 percent growth in the number of Emiratis working in skilled jobs every six months.

Abu Dhabi University

Dr Abdulrahman Al Awar, minister of human resources and Emiratisation, said the move “will have a positive impact and bring benefits” for both Emiratis and the companies who employ them. 

According to a PwC Middle East survey published in May, interest in private sector employment is beginning to increase among the younger generation – but nationals often do not stay the course. 

Two-thirds of those currently working in private companies said they are considering a return to the public sector. 

Bin Braik said the survey also showed that eight in 10 Emirati graduates have a desire to develop their entrepreneurial skills and start their own business.

The UAE economy has relied heavily on expatriate workers, who represent 89 percent of the population and 92 percent of the workforce. 

PwC said that although the government continues to be the leading driver of nationalisation in the UAE, the onus is now on private sector leaders to take up the challenge. 

“Ultimately, private sector organisations need to be more proactive in attracting national talent,” Bin Braik said.

“This means engaging directly with them through different channels such as career fairs and networking events, or leveraging online job-matching platforms that connect private sector employers with jobseeking nationals to increase visibility on available job opportunities.”

Incentives are provided to UAE nationals to join the private sector including salary top-ups, training grants, pension subsidies and child allowances.

The ministry also offers a package to companies that reach Emiratisation targets such as membership to the Tawteen Partners Club, which gives discounts of up to 80 percent on the ministry’s service fees.