While there are countless benefits to living in the UAE, one of the foremost drawbacks of being an expatriate is a lack of unemployment support policies or programs if you lose your job, in which case you have to bank solely on yourself to survive.
Although the cloud of the global recession has finally dissipated, one still needs to live wisely. Gone are the days when employers made extra efforts to retain employees. According to a poll conducted by Emirates 24/7 earlier this year: “A majority (59 per cent) of the employers in the country will not try too hard to retain their employees if they wish to quit.” The reason for this is the abundant supply of human resources in the country and the willingness of more to migrate here, where the grass is greener.
Keeping yourself financially afloat in the absence of a recurring income stream is a daunting task. For this reason, it is essential to always plan. Set up an emergency fund. Open up a savings account or create a sub account to keep some cash for rainy days. You can also invest in bonds or sukuk so that you get a regular coupon from your investment. Substitute cash with other forms of assets that will pay you back at regular intervals. This will also help you protect your savings rather than go to the ATM at the very first sign of trouble.
With an average annual interest rate of approximately 33%, according to bayzat, credit cards are your foe. So don’t think of using them when you are hard on cash or are deciding to leave your job, or you will quickly find yourself owing more than you actually have. In addition, financial institutions may pull the plug on them at the first sign of distress.
Make a budget and stick to it. You need to have cash reserves to meet your expenses for six months to a year if you plan on resigning or are let go from your job. Things to consider include: kids’ school fees, rent and utilities, phone bills, healthcare, and loan payments such as vehicle financing or your mortgage.
You can also check out redundancy insurance cover offered through some of the banks in the UAE. Banking products such as ‘involuntary loss of employment’ can provide support for card holders or borrowers, although conditions do apply. Make sure you read the fine print as there might be some hidden clauses that end up giving little protection if one loses their job.
Remember the UAE has strict laws against employees who quit before the end of their contract. As per one news report: “A lifetime ban (blacklisting?) can be imposed if a worker absconds (“does a runner”). A one year ban is imposed if a worker resigns before completing a limited period contract and the employer requests the ban. A six month ban is automatically imposed in most other cases if an employee has not completed two years of service (and sometimes even if they have). A six month ban can be lifted if the employee moves to another job or company but with the same sponsor or moves to a job with a minimum salary of AED 5,000 for high school diploma holders, AED 7,000 for post-secondary school diploma holders, or AED 12,000 for Bachelor degree holders.”
Getting fired or leaving your job is merely the tip of the iceberg, what ensues has a greater impact on the wellbeing of your entire family. Staying financially afloat means preparation, going on an appropriate financial diet to increase savings, having an emergency plan, and building on your resume by doing things of value such as attaining certifications; but most importantly, it also means being stress free.