Businesses Accused of Cutting Salaries of Supported Citizens: 8 Companies Referred to Public Prosecution

UAE Cracks Down on Companies Exploiting Government Job Subsidies

The UAE Ministry of Human Resources and Emiratisation has referred eight companies to prosecutors for illegally reducing Emirati employees' salaries after they received government wage subsidies through the "Nafis" program. This enforcement action signals the government's determination to prevent private sector abuse of a key policy designed to boost national employment in competitive industries.

The Nafis Program Under Attack

The violations came to light when Emirati citizens complained that their employers had cut their base salaries by amounts equivalent to the government subsidies they received through Nafis. This practice effectively nullified the program's benefits, leaving workers with the same or only marginally higher total compensation than before the government support.

The scheme represents a clear attempt by companies to shift labor costs to the state while maintaining the same wage expenses—a practice explicitly prohibited under Ministerial Resolution No. 663 of 2022 concerning compliance with Emiratisation systems in the private sector.

Smart Monitoring Systems Catch Violators

The ministry revealed it uses intelligent systems to monitor company compliance with Emiratisation policies, including tracking private sector wages. Regular inspection campaigns help identify violations and ensure companies don't exploit Nafis support illegally.

Why This Enforcement Matters

The crackdown reflects broader challenges facing Gulf states as they push to integrate nationals into private sector jobs traditionally dominated by expatriate workers. The UAE's approach mirrors similar programs in Saudi Arabia and Qatar, where government subsidies aim to make local hires more attractive to cost-conscious employers.

Economic Implications for Business

For companies, the enforcement sends a clear message: government employment incentives are meant to supplement, not replace, competitive wages. Businesses that try to game the system face legal consequences and potential exclusion from future government contracts or support programs.

The violations also highlight the delicate balance policymakers must strike between making local workers economically attractive to employers while ensuring they benefit from government investment in their careers.

Emiratisation's Growing Success

Despite these compliance issues, the UAE's job nationalization drive continues expanding. More than 152,000 Emiratis now work across over 29,000 private companies as of June 2024, demonstrating significant progress in diversifying the national workforce beyond the public sector.

Regional Context and Competition

The UAE's enforcement approach contrasts with Saudi Arabia's more punitive quota system, which can restrict business operations for non-compliance. The Emirates appears to favor a balance of incentives and penalties, using programs like Nafis to make hiring nationals economically attractive while prosecuting companies that abuse the system.

This strategy may prove more sustainable long-term, as it encourages genuine private sector engagement rather than mere compliance with government mandates. However, continued monitoring and enforcement will be essential to prevent companies from finding new ways to circumvent the program's intent.

Looking Ahead

The ministry has established multiple channels for citizens to report violations, including websites, mobile apps, and dedicated hotlines. This comprehensive reporting system suggests the government expects ongoing challenges as it scales up Emiratisation efforts across diverse industries.

Success will ultimately depend on creating a business environment where hiring Emiratis makes economic sense for companies, rather than simply transferring costs to the state. The current enforcement action represents an important step in that direction.