Analysis

UAE Can Afford to Pay for Coronavirus Fallout as Restrictions Bite

The UAE built an image for itself as a country that takes care of foreign workers but the state isn’t blind to the hefty economic damage caused by the crisis

A photo of Dr. Zvi Bar'el.
Zvi Bar'el
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Abu Dhabi's Crown Prince Sheikh Mohammed bin Zayed al-Nahyan is tested for the coronavirus.
Abu Dhabi's Crown Prince Sheikh Mohammed bin Zayed al-Nahyan is tested for the coronavirus.Credit: MINISTRY OF PRESIDENTIAL AFFAI
A photo of Dr. Zvi Bar'el.
Zvi Bar'el

“Can my employer deduct a quarter of my salary because he claims he has sustained losses due to the coronavirus?”, “I’m a Muslim man married to two wives, one lives with me in Dubai but the other in the emirate of Sharjah. Am I allowed to visit her?”, “Is it permissible to publish on social media the names of people infected with the coronavirus?”

These are only some of the questions posed by United Arab Emirates residents to media outlets, asking for legal explanations on their status, about their rights as immigrant workers or citizens, and mainly about the fate of their salaries at a time when thousands have had to leave their jobs and, or foreigners who can no longer transfer funds to their families back home.

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Haredi leaders learn harsh corona lesson as Israel sends in the troopsCredit: Haaretz

Most responses rely on the sweeping order released by the UAE government in late March, detailing regulations that apply to employers and employees, both citizens and immigrants, and the heavy penalties they could suffer for any violations. According to that order, for example, leaving the emirate one resides in is only allowed by special permit issued for reasons such as to purchase medical supplies or food, or for workers deemed essential.

The man who asked whether he could see his second wife is not allowed to do so, and if he violates the order he faces a 500-dollar fine and possibly even a prison sentence. Employers are allowed to cut their workers’ salaries, but only if employees agree and confirm that by signing an appendix to their contract. However, if an employer does so unilaterally, they can anticipate being fined for violating the work code.

And just as importantly, employers must ensure workers who are laid off still have a decent place to live, or pay them a residence allowance until that employee returns to their home or finds a different job.

The UAE has built an image for itself as a country that takes care of foreign workers, from before the coronavirus crisis hit. The government set up two dedicated websites, one for handling workers’ claims against employers during the pandemic, and another for processing thousands of travel permits issued by citizens and foreigners alike.

At the same time, the state isn’t blind to the hefty economic damage caused by the crisis which has led to the closure of thousands of small businesses. It has announced a generous aid program of more than $60 billion. About $15 billion of that sum would allow banks to lower their liquidity buffer and grant loans to investors and entrepreneurs, as well as private citizens. Another $12 billion would be handed out as interest-free loans or other direct aid, and the remaining sum would be used to help those in need and to speed up the development of infrastructure and services to tackle the coronavirus outbreak, which has claimed two lives out of more than 4,100 infected Emiratis.

The government has significantly reduced the fees it charges for licenses and permits that residents, merchants and small business owners must obtain, such as business permits, trademark registration fees and import licenses. It also delayed deadlines for paying fines by three months, apart from those for violation of coronavirus restrictions. Those who reveal the names of coronavirus patients or spread false information about the disease on social media are handed hefty fines; according to the latest regulations, they could be asked to pay anywhere between $15,000 and 120,000 for such violations and face up to six months in prison.

In addition to this abundance of attempts to alleviate the burden, there are mounting complaints about the lack of organized and clear information explaining how those entitled to receive financial aid may actually receive it. The forms are ready and government websites say they can handle thousands of inquires but no one knows what will be the terms for taking out a loan, when they will have to be paid back and who is entitled to grants.

The numbers of advisers and mediators offering their services to businesses seeking economic benefits has risen in recent days. Another phenomenon is a spouting of initiatives and apps attempting to circumvent the restrictions on free movement and other emergency regulations imposed by the government. Many new apps offer deliveries, shopping arrangements, online athletics and remote learning.

A traveler wears a mask at Dubai International Airport, United Arab Emirates January 29, 2020.
A traveler wears a mask at Dubai International Airport, United Arab Emirates January 29, 2020. Credit: Christopher Pike/ REUTERS

A gym owner in Dubai said that she had decided to rent her exercise bikes to those with a gym membership for $250, with the price including unlimited access to online sessions. This initiative doesn’t produce profits but it does preserve existing customers and pay maintenance bills.

Furthermore, many business owners are wondering what will happen once the pandemic ends. The government pledges to assist and funnel large sums of money to rehabilitate the commerce, aviation and services sectors, but UAE policy is dependent on tourists and real estate transactions that are signed face to face. The return of tourists and businessmen to the country would depend on the level of trust they have that the pandemic is under control and proof that the danger has passed, which can take a very long time.

City-states like Dubai, which had a real estate crisis even before the coronavirus outbreak, cannot expect that once the pandemic is curtailed, potential buyers will flock en masse and save the industry and the International Trade Fair Expo 2020, whose anticipated opening in October is in question. It appears the state coffers will have to part from many more billions of dollars before the UAE’s private sector will be back on its feet.

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