Could UAE be the Biggest Winner of the New Global Workforce?
Amit Yampolsky| Jul 04, 2022
There’s no doubt that the way we work has changed for good, and I speak to so many smart businesses all the time who are looking for new regions for expansion where they can leverage a largely remote, wholly employee-focused global workforce.
I recently spent some time representing Papaya Global alongside 8 other unicorn companies at a delegation hosted in the United Arab Emirates. The federation of 7 Emirates which includes Abu Dhabi and Dubai, is a region that I believe should be right at the center of the conversation around today’s changing workforce.
The country is quickly becoming one of the most popular choices to expand into, both for multinational companies to see further business growth and for start-ups who want to take advantage of the relatively small economy as an entry point to other GCC (Gulf Cooperation Council) countries. Here are some thoughts about this exciting, up-and-coming, and transformational region…
The process of relocating employees
For expats, UAE is an easy choice for relocation. In a modern working environment, the government makes compliantly working in-country as seamless as possible to encourage global businesses to set up roots. There is only one form of work permit, and employees will simply need to be sponsored by a locally incorporated business in-country and have a residence visa to be eligible.
This is a straightforward process where the company applies for the individual to enter the UAE by asking for visa quota approval from the Ministry of Labor and submits an employment contract for their consideration. Once this has been signed off, the worker has two months to enter the UAE, where they can apply for a residence visa and work permit. Once granted, this lasts for anywhere from 1-3 years and can be renewed.
Long-term residence visas last 5-10 years and are available for investors, entrepreneurs, and talented individuals.
Recent discount programs for private companies mean that organizations can now get steep discounts on worker relocation if they show commitment to workers’ rights protection laws.
A Competitive cost of living
For employees relocating to UAE, the cost of living is significantly lower than other options. To continue the comparison, consumer prices are 31% lower than in Singapore, rent is 19% lower, and the cost of groceries is 35% lower. To maintain the same standard of living as you could have with around $6,500/month in Abu Dhabi, you would need $8,800/month in Singapore. As an added perk for employees, UAE has one of the highest numbers of mandatory vacation days, at 30 days plus 15 public holidays.
Understanding local labor laws
As I mentioned above, for multinational companies to employ workers in the UAE, they need to have an entity set up in-country. Labor laws make this a transparent and straightforward process, especially compared to other regions worldwide. For example, foreign businesses do not need to obtain a local agent or national sponsor, offering a key strategic advantage. In addition, more than 40 “free zones” are distributed around the UAE, allowing for tax exemptions and 100% foreign ownership, including Dubai and Abu Dhabi.
As the majority of innovation and economic growth is top-down, with initiatives coming from the authorities, doing business can be far easier than it would be elsewhere. The authorities can simplify regulation and minimize barriers to doing business. A good example is how the UAE has become one of the first countries to pass laws governing virtual assets.
In terms of the practicalities of setting up a business, while traditionally, LLCs were required to meet a minimum capital amount, today, that is no longer the case. There is no minimum capital at all. Instead, each business will be considered individually according to its plans for local activities by the Department of Economic Development, making it far easier for global businesses to incorporate locally. This is an example of how I see the Emirates favoring a traditional approach to business, where a personal relationship is formed before considering contracts and signatures.
Businesses might want to open a branch office for services and consultancy work. Remember, this can’t involve import/export businesses or manufacturing. Once a Local Services Agent has been found and approved, the business simply applies to the Department of Economic Development to reserve their company name, applies online to the Ministry of Economy, opens a bank account, and becomes a member of the Chamber of Commerce and Industry.
Each task takes no more than a day, and many can be completed online, which means you can technically be working in-region in under a week. When it comes to costs, you should expect a set-up charge of somewhere in the region of 80,000 AED, about $20,000 USD. For opening an LLC, costs will vary because of added notary fees and a variable cost of 5% of the lease agreement.
A growing number of government incentive plans
To encourage employers to set up local offices and support employees in moving to work locally, governments have set up specific incentive plans in the UAE.
One example is the Green Visa, allowing those who own their own businesses to look for work in the UAE, even without being sponsored by another employer. Another is a residence permit for remote work, which allows those working virtually to stay in the UAE, even if their company is not based in-country.
Changes are happening fast to incentivize expats to live and work in the UAE. Just this month, an announcement was made for a brand-new end-of-service savings scheme in Dubai for expats working in the public sector. In addition, over the past few years, there has been a shift in local laws to ensure the Emirates becomes a popular destination in which to live and work.
For example, in 2020, UAE decriminalized cohabitation pre-marriage as part of an overhaul of their legal system, which looked at the family and personal law. Critically, rather than rely on Sharia law alone, in many situations, the judicial courts now allow individuals to rely on the legal system of their home country, supporting individuals who want alignment with a legal system that embraces their Western values.
Expatriates outnumbering Emiratis
It’s been amazing to watch the UAE going through many changes to support global businesses in taking advantage of this increasingly up-and-coming region. As a central hub for flights, it’s clear that the government recognizes that they have an opportunity to benefit from the remote working landscape and the revitalization of tourism and business travel.
With simple steps for quick incorporation, a growing number of worker benefits, low taxation for employer and employee, and increasing governmental support, if your eye isn’t on UAE as part of your global expansion plans, perhaps it should be.
Schedule a call with me to discuss international expansion for your business.
Papaya’s global payroll technology thinks about everything. So you can focus on what matters–your business.
What are you looking to do?