The insurance and banking sectors in the UAE are set for a major change – with the implementation next January of a new strategy, identified as the Emiratisation “point based system”.
The Emirates Institute for Banking and Financial Studies (EIBFS) is working closely with the Ministry of Presidential Affairs, the Central Bank, and the Insurance Authority (IA), on the system which has been approved by the UAE Cabinet.
The new Emiratisation strategy emphasises employment generation and talent development, said Ms Noura Abbas Ahmed, Director of the Training Department at EIBFS, in an article in Gulf News.
Under the new scheme, all insurance companies and banks operating in the UAE will be allocated their Emiratisation target points by the IA and Central Bank, respectively. Target points for insurance companies will be based on gross premiums while those for banks will be based on operating income. This ensures a high level of fairness, as smaller entities would have lower targets and larger institutions would have to achieve higher targets.
An “input point” tool rewards the training and development effort made by these institutions in developing the skill set of their Emirati workforce. This is measured using a quantitative methodology based on the investment made in training their Emirati employees.
In addition, an “output point” tool measures the rewards based on actual job generation and the quality of jobs created. The insurance companies and banks can score high points if they have Emiratis working in senior and mid-level positions rather than non-managerial roles. Through this method, institutions are further encouraged to develop the skill sets of Emirati employees so that they can move up to higher roles.
Additionally, another key highlight of the system is that institutions will attain double rewards in the form of points for every Emirati employee who occupies a “critical position”. Critical positions are roles specified by the IA and Central Bank which range from entry-level positions to higher roles in select departments. Today, a large majority of Emirati employees work in entry-level positions in retail banking roles, with no scope for advancement. By implementing this mechanism, Emiratis can progress beyond entry-level positions.
Current quota system
In comparison, the current Emiratisation system relies on quotas and mandates that insurers and banks employ an allocated percentage of Emiratis in their workforce.
Various studies have shown that the preference among Emiratis to work in the public sector leaves the private sector with a low talent pool, which is just around 10% of the Emirati workforce. Banks and insurance companies account for more than 50% of the Emiratis working in the private sector.
The authorities, though, have noticed that the growth of UAE nationals has plateaued, and in addition, various stakeholders have expressed concerns that the current quota system emphasises predominantly on quantity – rather than the quality – of the jobs created. The “one size fits all approach” in the form of a fixed percentage is also affectingthe competitiveness of these sectors.