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- Abu Dhabi makes up 85% of the total land mass of the United Arab Emirates and 92-95% of its oil and gas reserve.
- Its state pension programme is a defined benefit scheme, typically funded by government, employee and employer.
- Local employees have access to free state healthcare but often also receive private medical insurance through their employer.
- Pay structure is made up of a basic salary and cash allowances for housing, transportation and children’s education, with a holiday bonus.
Abu Dhabi offers generous benefits for both local staff and expatriate employees, says Jennifer Paterson
Abu Dhabi occupies over 85% of the total land mass of the United Arab Emirates (UAE) and 92-95% of the area’s oil and gas reserve. So it is no wonder this emirate has overtaken Dubai as the most financially stable and continually developing in the UAE. State and workplace benefits for local employees rival those offered in most western countries.
Callum Burns-Green, head of employee benefits for the Middle East at Mercer, says: “The Gulf states have several ways to pass on part of their wealth to the local national population. One is comprehensive and, by western standards, generous state benefits.”
State benefits includes a pension, built-in death and disability cover, and healthcare. The state pension for Emirati national workers across the UAE is a defined benefit plan with contributions from government, employee and employer. In Abu Dhabi, some employers contribute as much as 12.5% or 15% of an employee’s base pay, but are not obligated to provide anything beyond that.
Inadequate funding for pension schemes
But despite this generous contribution, UAE pension schemes have more money going out then coming in, says Iain Collins, senior consultant at Towers Watson. “One of the big problems out there is a lot of [UAE state pension schemes] are not adequately funded.”
Local staff also have access to free healthcare. “It is better than the NHS,” says Collins. “The level of care is better. No expense is spared in equipment and access.”
Legislation introduced in 2005 compels all employers in Abu Dhabi to offer expatriate staff based in the region and their dependents some form of private medical insurance (PMI). On top of the state-provided healthcare offered to local staff, employers will often add the same type of PMI that is offered to expats. “Even though the nationals get state provision, the private medical programme may give them faster turnaround times,” says Burns-Green.” But there is no real obligation on the [employer] to do that because the state system looks after the Emiratis so well.”
Pay structures in the UAE are also quite different from the UK. Most organisations provide a variety of financial allowances for both expat and local staff. Basic pay typically constitutes 60% of an employee’s monthly earnings, with the remaining 40% paid in the form of housing, transportation and children’s education allowances.
Holiday bonus for locals
Expatriates are also given an allowance to fly back to their home country. Peter Christie, director of reward consulting at Hay Group Middle East, says: “Emiratis would qualify for a holiday bonus as well. They get a cash amount to help them fund a ticket.”
Perhaps one of the reasons local staff are rewarded so well is that the local working population makes up only about 10% of the country’s workforce. But under Abu Dhabi’s 2030 economic plan, that is set to change. The plan will focus on human resource capacity building and creating high-value employment opportunities for local staff.
The UAE’s overall reward structure has gradually developed over the past 25 years, says Burns-Green. “As employers develop and provide more benefits to expats, they will potentially offer those benefits to [local staff] as well. It may well be [local staff] benefit from the evolution of the reward structure and employee benefits. Employers will not want to treat them differently.”
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