Employee six months out of country for Labour Card cancellation

UAE employees who stay outside the Emirates for more than six months can have their labour cards cancelled. This was revealed at the weekly labour ministry meeting, according to 'Al Ittihad' newspaper. Companies must submit proof of absence along with documents of due settlement. The ministry officials refused to accept an employer's request to cancel an Arab's labour card who has been outside the country for only five months.

The company was asked to wait for another month and then submit the proof of the worker’s absence to the department of naturalisation and residency along with  documents to prove settlement of all his dues. Only then can the employer apply  for cancellation of the worker's labour card.

Amending Labour Contract

Addressing another case, ministry officials clarified that companies can amend  labour contracts - change names of professions or salaries - only in the presence of the  employees concerned. Else it will be considered a violation of labour rights.

Temporary work permit

Issuance of temporary work permits would depend on the type of labour dispute and  would be considered by the ministry only once the case has been referred to the  labour court. Once the terms and conditions as stipulated by the labour laws are adhered to, the ministry reserves the right to issue temporary work permits without the approval of employers. Similarly, the worker in dispute, need not necessarily have a residence visa provided it is proved that the case has been  referred from the labour court.

Job transfer

Workers under three skill levels can end their contract without an agreement with  the employer even before completing two years. They include employees who have a  bachelor's degree and earns a minimum Dh12,000; or diploma holders with Dh7,000  monthly salary; and those who possess secondary school certificate earning  Dh5,000.

Meanwhile, officials approved a request of a company to hire as director a British  who has no university degree but holds a certificate from a institute which he  attended for three years after high school.

Explaining its decision, the labour committee, including Khalil Khouri, Director  of work permits, and Saleh Al Jabri, Director of the Unit of facilities in Abu  Dhabi, said in this case the employee has 10 years’ experience in the same job at  the headquarters of the company in his country.

UAE plans to provide multiple entry visa for cruise tourists

The United Arab Emirates may provide multiple entry visa for cruise tourists from September, sources disclosed. The issue was under discussion for almost three years.

“It is finally expected to be in place by September,” a senior official of Dubai Department of Tourism and Commerce Marketing (DTCM) disclosed.

“We have reemphasized the importance of having implemented a multiple entry UAE visa for the cruise tourists to the highest level and it is under way. Hopefully, we will have a positive feedback before the next cruise season commencing in October this year,” Hamad bin Mejren, DTCM Executive Director of Business Tourism, said at a press conference recently.

The UAE has the most modern and the largest cruise facility in the GCC, spanning over a 12,000 sq m with a dedicated pier length of 2000 meters with the capacity to accommodate five to six cruise ships simultaneously.

The current visa process imposes financial burden as well as a lot of documentation procedures for the tourists of nationalities who are not on the list of countries whose citizens get visa on arrival. The multiple entry visas will help in removing such obstacles and will create a wider marketing perspective to bring tourists from key source markets such as Russia, China, India, South Africa, Brazil and other emerging markets.

Dubai Cruise Terminals, managed and operated by DTCM for the government of Dubai, catered to 396,500 cruise tourist who arrived from 108 ship calls in 2011. This year, Dubai is expected to see 420, 000 cruise tourists to the emirate, giving a big push to the tourism growth and the economy. The projections for 2013 are 125 cruise ships and 450,000 passengers and in 2014 the number of cruise ships and passengers will be 135 and 475,000, respectively. In 2015, this number will go up to 145 cruise ships and 500,000 passengers.

UAE reaping the benefits of its early efforts to diversify the economy IMF Staff Report for UAE - 2012

The UAE economy is gradually recovering from the 2009 crisis. The banking sector was strengthened through significant capital injections, and some progress has been made in restructuring the debt of government-related entities (GRE). The ailing real estate sector is beginning to find bottom but, given the ongoing oversupply, an early and broad-based recovery of the sector remains unlikely.

Outlook and risks. The recovery of the nonhydrocarbon economy, however, looks set to continue this year, backed by strong trade, tourism, logistics, and manufacturing, and helped by high oil prices. With limited near-term potential for further increases in real oil production, overall GDP growth is expected to moderate to 2.3 percent. Downside risks relate to a possible increase in regional geopolitical tensions, a potential decline in oil prices, a renewed worsening of global financial conditions, or a marked slowdown in Asia.

Macroeconomic policy mix. The UAE plans a gradual fiscal consolidation this year which will help unwind the fiscal stimulus of recent years and lower the currently high fiscal breakeven oil price without undermining the economic recovery. The planned fiscal consolidation will also increase the room for maneuver in case the downside risks materialize. Monetary policy will stay appropriately accommodative under the U.S.dollar peg.

Government-related entities. The GREs continue to face financial challenges in light of their high debt and rollover needs. Further deleveraging and strengthening of impaired GRE balance sheets is needed. Improving GRE corporate governance and increasing transparency about their financing strategies, financial conditions, and debt profile would be important to strengthen market confidence. Channeling bank funding to non-viable GREs should be avoided.

Financial stability. The banking system maintains significant buffers to withstand a further deterioration in asset quality and external liquidity conditions. The central bank should nonetheless continue to closely monitor banks’ liquidity and capital buffers as individual banks could be affected if downside risks materialize.

Statistics. Effective policymaking is contingent on timely and accurate data, rendering further improvements in the statistical framework important

BACKGROUND

1. Following the 2009 crisis, the economy has been slowly recovering and repairing its balance sheets. The Dubai World debt restructuring was completed, but several other troubled government-related entities (GRE) are still in the process of restructuring. The authorities strengthened the banking sector through liquidity support, recapitalization, and deposit guarantees, and the emirate of Abu Dhabi provided financial support to the emirate of Dubai. The Dubai Financial Support Fund (DFSF) was called to support troubled entities in the emirate and has now almost exhausted its funding of $20 billion.

2. The UAE has been reaping the benefits of its early efforts to diversify the economy. As the UAE developed into a major services hub in the Middle East, its dependency on oil exports declined markedly.

Based on its well-developed hospitality and services sectors, tourism, transportation and logistics have been major drivers of the post- 2009 recovery. The UAE has also been benefiting from high oil prices and strong growth in Asia. As a result of its perceived safe haven status and developed services sector, the country benefited from an increase in demand for property by expatriates and a

surge in tourism in the wake of the turmoil in the MENA region that began last year.

Recent Developments

3. The economic recovery continued and the external position strengthened significantly in 2011. Real GDP growth reached an estimated 4.9 percent, supported by high oil prices and production in response to disruptions in Libya. Nonhydrocarbon growth also strengthened, to around 2.7 percent, backed by strong trade, logistics and a surging tourism sector, despite the continued weakness of the construction and real estate sectors in the aftermath of the 2009 crisis. Backed by high oil prices and buoyant Nonhydrocarbon exports, the external current account surplus increased markedly, to around 9 percent of GDP. Inflation remained subdued at an average of 0.9 percent in 2011, mainly due to a continuing decline in housing rents and limited pass-through of international food prices.

4. The large property overhang continues to be a drag on the economy. Since mid-2008, real estate prices have fallen by more than 60 percent in Dubai, and to a lesser extent in Abu Dhabi. The large supply overhang and the completion of additional projects in the coming years render an early and broad-based recovery of the sector unlikely (Box 1).increased its current and development expenditures, and extended substantial financial support to Aldar, its flagship real estate developer.2 Following a contraction in 2010, Dubai’s deficit increased slightly in 2011, mostly on account of further spending from the DFSF. Nonetheless, high oil prices led to an improvement in the consolidated overall balance from a deficit of 2.1 percent of GDP in 2010 to an estimated surplus of 2.9 percent of GDP in 2011.

 5. The recovery was supported by an expansionary fiscal policy. The consolidated government nonhydrocarbon primary deficit (including loans and equity) rose to nearly 42 percent of nonhydrocarbon GDP in 2011 (from 36 percent in 2010), as Abu Dhabi increased its current and development expenditures, and extended substantial financial support to Aldar, its flagship real estate developer.2 Following a contraction in 2010, Dubai’s deficit increased slightly in 2011, mostly on account of further spending from the DFSF. Nonetheless, high oil prices led to an improvement in the consolidated overall balance from a deficit of 2.1 percent of GDP in 2010 to an estimated surplus of 2.9 percent of GDP in 2011.

6. Supported by accommodative monetary policy, banks remained amply liquid but private sector credit growth did not pick up. In light of low U.S. interest rates, monetary policy stayed accommodative under the fixed exchange rate regime. Lending to the private sector has nonetheless remained sluggish and lagged behind the recovery in credit growth in neighboring GCC countries, as

excess capacity in the real estate sector and the debt overhang still limit lending opportunities. Despite a continued rise in nonperforming loans (second highest level among GCC countries), the banking sector has remained well-capitalized and profitable, as the net interest margin has remained

comfortable. In October 2011, the authorities quickly resolved Dubai Bank through a takeover by Emirates NBD bank

1 The Dubai Financial Support Fund, financed in equal parts by the central bank and Abu Dhabi, was established in 2009 to provide financial support and liquidity to government and government-related entities undertaking projects of strategic importance in Dubai.

2 The consolidated government comprises the federal, Abu Dhabi, Dubai, and Sharjah governments accounting for over 99 percent of total UAE fiscal expenditures.

3 In connection with this transaction, Emirates NBD received a Dh2.8 billion deposit from the ministry of finance. The government of Dubai has provided a guarantee—with a fair value of Dh768 million—for any losses relating to existing assets for seven years.

UAE Labour ministry contract supersedes all other documents

The Ministry of Labour contract takes precedence over all agreements between employer and employee and is the only document that is recognised by the authorities, the ministry has warned.

A senior labour ministry official told Gulf News any contract between the employer and the employee other than the labour contract will not be taken into consideration.

The warning comes after some employees have complained that they are being deprived of their rights as laid down in the labour ministry's contract.

A group of insurance specialists have alleged that their company is cheating employees by forcing them to sign a letter of intent and depriving them of rights guaranteed by the labour ministry's contract, including basic pay and gratuity.

Paying back commission

The employees who work for Nexus Insurance Brokers told Gulf News that the company was unwilling to accept resignation letters unless the staff hand over all commissions they earned last year.

Documents obtained by Gulf News show the employees have a limited labour contract under which they are given a basic salary of Dh0.001 and Dh6,000 for accommodation, transportation and other allowances.

The letter of intent, which the insurance specialists were forced to sign, says employees were issued a labour contract because it is a requirement of the UAE law. The principal purpose of the labour contract will be to "sponsor employees' activities in the UAE and does not constitute in part or full their contract with Nexus".

"All benefits mentioned in the labour contract issued by the labour department and any other benefit such as accommodation, transportation, leave, air ticket, leave salary, entertainment, gratuity and other benefits are in fact included in commission, and may be stated separately in the labour contract only for the purpose of enabling you to sponsor your family and domestic help in the UAE," the letter of intent says.

R.J., an employee, said they were forced to sign an undertaking that if the company was required by law and the labour contract to pay a certain amount to them, the employees must repay the company commission and collection fees. He alleged that the company does not accept resignations till employees pay back what they have earned in the form of commissions in their last year at work.

"Unless we give them the last year's earnings, they will not cancel our visas," B.F., a former employee, said. "When I resigned, the company handed me a letter that said my resignation would be accepted, but I must first pay a cheque amounting to my last year's earnings. Only then would they give me a release letter."

Employer reaction

Hussain Ayyash, legal and human resources director at Nexus Insurance Brokers, told Gulf News that all the letters of intent are legal and issued to protect the company's rights. "Our employees work on commissions and they earn a huge amount of money. As the employees work on commissions, they have no labour rights. We issue employees a labour contract as a formality as we have to issue it. The labour contract contains certain allowances, which helps employees sponsor their families. But we do not work according to the labour contract. For us, it does not exist."

He said he had filed a complaint at the labour ministry against some employees who had recently resigned and joined competing firms. "We also have to take back commissions they earned in the last year of work with us," Ayyash said.

Gulf News has learnt that the labour court recently ordered Nexus Insurance Brokers to pay Dh20,000 as end of service benefits to a British consultant who resigned and complained against the company to the labour ministry.

Mohammad Bin Dakhin, Director of Governmental Communication at the labour ministry, told Gulf News that any agreement between the employer and the employee other than the labour contract would not be taken into consideration. "In case of dispute between the employer and the employee, the ministry will only consider the ministry's contract," he said.

Bin Dakhin said a letter of intent or internal contracts between the employer and employee are not accepted. "It is illegal to consider that the labour contract has been issued only to allow employees to sponsor their families. Denying workers the rights mentioned in the labour contract is illegal," he said. Bin Dakhin said that any contract between the employer and employee not signed and approved by the labour ministry is not a legal document.