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Emiratis feel strains of moving to private sector

Government toughened rules on sacking nationals

Nationals of the United Arab Emirates say they feel the pinch of the ravaging worldwide financial crisis despite a government decree last week that protects them against layoffs in the private sector.

Mohammad Al Hammadi, a government employee and a real estate investor, said the financial crisis has “drastically affected” his businesses, with home prices incessantly dropping by the day.

“This apartment was valued at more than AED 1.5 million [$408,000] when I bought it a year ago, now its value is less than AED 1miliion [$272,000],” he said while showing some of his home properties in Dubai.

“Now investors like me are struggling to pay their loans and mortgages, making profits is not the word of the day.”

With a government strategy to stimulate the private sector and modernize the public sector, which was expected to reduce government jobs from 65,000 to 8,000 by the end of 2007, Increasing numbers of UAE nationals are now entering the less comfortable and more risky private sector, according to a report by Oxford Business Group.

In 2007 the number of public sector jobs dropped to 28,000, and more UAE nationals are working in the private sector than ever before, according to the report.

“As we start to move to the private sector, we have begun to feel the strains of market volatility,” said Hussein Al-Khalifa, a UAE national working for an IT company in Sharja.

As we start to move to the private sector, we have begun to feel the strains of market volatility

Hussein Al-Khalifa

Now harder to fire a local

When asked about a recent government decree to restrain the layoff of UAE nationals in the private sector, Hammadi said it was “not enough to simply put restrictions on firing Nationals because big companies with well-experienced lawyers can always find loopholes in the law.”

The UAE Labor Ministry passed the decree last Wednesday to protect local employees in the private sector, following the layoff of 20 nationals earlier this month by the local corporate retailer and real estate investor Al Futtaim Group.

Under the new regulation, the dismissal of UAE nationals from a company employing a foreigner doing the same job would be considered "illegal,” WAM news agency reported, citing the decree issued by Labour Minister Saqr Ghobash.

"(The decree) considers ending the service of the national as 'illegal'... if it were proven that a company is keeping a non-national doing the same job," the agency reported.

But Hammadi and Khalifa said the government decision will not help relieve the difficulties nationals face as they move to private sector.

“What can the government do in my case or in the cases of many nationals out there going bankrupt every week,” Hammadi said.

“I agree with the government decision and I think it needs even to clearly prohibit the dismissal of nationals and allow the exception only in extreme and special cases,” he added.

“We are a very small minority in our country and why would someone complain about us if it was us who first opened the gate for him to engage in lucrative business and make money impossible for him to make elsewhere?” Hammadi asked.

We are a very small minority in our country and why would someone complain about us if it was us who first opened the gate for him to engage in lucrative business and make money

Mohammad Al Hammadi

Maybe harder to recruit them as well

But many analysts expressed concern that such law will discourage private companies from hiring nationals and hinder the government strategy to integrate its citizens in the private sector.

Director General of the Dubai Chamber of Commerce Hamed Buamim said the decision will make companies “think twice before hiring UAE nationals," the Gulf News Reported Saturday.

"Any ruling imposing regulations on the private sector will have a negative effect on business,” he said. “Companies will be more cautious in employing Emiratis. Such decisions might discourage employers from employing UAE nationals and encourage Emiratis not to give their best."

Khalifa noted that the law also affects Emiratis business owners. “The problem now is that we also have a lot of nationals owning businesses, and this regulation puts them in the same boat as foreign business owners.”

“I understand this law may discourage private firms from recruiting locals and they will level the standards of recruitment, which will also compel locals to sharpen up their skills,” he added. “So, I think the law may be good for both sides.”

Financial companies, especially in Dubai have been shedding staff since the credit crunch led to a breakdown in the real estate sector that has since spread to other sectors, including tourism, banking and insurance.

Companies will be more cautious in employing Emiratis. Such decisions might discourage employers from employing UAE nationals and encourage Emiratis not to give their best

Hamed Buamim