Focus shifting from financial-led contracts to ‘psychologically compelling’ contracts in the UAE

Increasingly flexible UAE labor laws are helping retain, attract top talent, ‘but more could be done,’ an expert says.

The UAE has, over the years, seen greater flexibility in its labor policies – particularly in capturing new ways of working and implementing more progressive maternity provisions.

Although these moves represent a positive development in the country’s aim to augment the workforce – “the region still lags behind labor rights and workplace wellbeing and flexibility measures commonly seen elsewhere,” Dubai-based firm Mercer Talent Enterprise (TTE) co-founder Radhika Punshi, said.

“Greater flexibility in UAE labor laws, particularly around part-time working and maternity provisions are helping to attract, but more importantly to retain talent,” she told Arabian Business, adding the recent moves are “in the right direction.”

Negotiating the ‘psychological contract’

Although UAE remuneration packages “are financially compelling at present,” Punshi noted new research that points to an increasing emphasis on the “psychological contract” companies can offer potential hires, especially for younger workers.

“A growing focus on ethical alignment, environmental and social sustainability, diversity and inclusivity, opportunities for workplace wellbeing and a sense of purpose, etc means these broader aspects of the “psychological contract” are no longer negotiable or able to be sacrificed – they are essential,” she explained.

She added: “This is why we are seeing a greater focus on managing the employee experience, designing sustainable work practices, greater diversity and inclusivity across all demographics and identities and promoting wellbeing at work. More and more people are no longer prepared to invest their talent in organizations which are perceived as having toxic employer and product brands.”

This is especially true in the UAE where residence status are tied to employment, Punshi said, highlighting the “disproportionately large impact” of work on people’s sense of identity and self-worth, “significantly more than we see in other parts of the world,” she added.

The great resignation

Widespread resignation has become a hot topic in the human resource space, particularly in the West where the US’s “quit rate” has hit a 20-year high in November last year. In the region, job losses were mainly driven by the Covid-19 pandemic that hit companies’ bottom lines – with visible tremors in the tech sector.

“Recent stock market falls have focused on technology categories and this has changed the general investment landscape for the sector at present. Crypto has been hit particularly hard, with the world now entering what could be a prolonged crypto winter,” TTE’s Punshi said.

Recently however, the region has seen significant recovery in several pandemic-hit sectors including energy, tourism, retail, and hospitality.

“We are seeing the energy sector and government sector employment expanding, as you would expect as energy prices and the value of the dollar continue to soar,” she said.

She added: “Roles in the tourism, transport, retail and hospitality sectors are also recovering from the declines experienced in the last 2 years, although hiring cycles and the attractiveness of such roles is not as positive as pre-pandemic and these are the sectors which are showing.”

Robots replacing humans

The Dubai-based talent firm also noted a steady demand for automation particularly in traditional banking sectors and corporate support functions, pushing talent acquisition to be “subdued.”

“Automation remains a priority for many of our clients and the current tight labor market and war for talent means that seems set to continue for the foreseeable future,” she said.

According to a recent survey by American cloud-based software Salesforce, demand for automation has increased globally for roles in research and development, administrative and operations, customer service, and marketing.

The challenge, however, is that existing IT infrastructure in many companies are impacting the speed of adoption, the research showed.

“Organisations across every industry want to automate processes and customer experiences as quickly as possible. However, if they try to go fast with the wrong tools and techniques, they’ll actually impede true innovation,” said Matt McLarty, global field chief technology officer at MuleSoft, said in a release.

The survey also showed that more and more organizations will have “hyperautomation” on their technology roadmap within the next 24 months.

“The organizations that thrive in the digital economy are the ones that adapt to changes the fastest,” McLarty said.

Reference website: