As the UAE continues to set standards against the highest global benchmarks in every field, it should be no surprise that the trend is continuing into employee wellness generally and the end of service benefits scene specifically. That trend continues into the countdown to the first edition of the Workers Incentives & End of Service Benefits Conference under the patronage of the Federal Authority for Government Human Resources and organized by Mondial (Dubai) LLC, a leading financial advisory firm in the UAE, on February 26th at Intercontinental Festival City, Dubai.
At the global, supranational, level the likes the United Nations and World Bank have been clear in their objectives to reduce global poverty. Under this banner, the role of Severance Pay Schemes (or End of Service Benefits Schemes as they are called in the UAE) are a critical backbone to retirement planning generally. A recent Quilters Report suggests that in the UAE 6 out of 10 employees are reliant on their EOSB gratuity to fund retirement.
The first of its kind event in the UAE will involve a gathering for experts, & EOSB veterans from international and local organizations presenting to an audience including federal government staff as well as CFOs and Human Capital officials from the private sector.
The agenda will cover an overview of the global problem from international consultancies like Mercer and EY, a view of local issues from legal firms such as Clyde and Co, as well as the solutions and options that are currently available in the UAE market.
According to Mercer the gap between the value of pension benefits around the world and what pensioners really need to live a decent life is $ 70 trillion, more than the GDP of the 10 largest economies in the world. “A financial gap of this kind will lead to a “black swan” situation, which indicates a possible global financial crisis”, says Mercer. Something clearly needs to be done at both a global level as well as a local level.
In responding to questions on the objectives of the WIEOSB Conference, Sean Kelleher, CEO at Mondial & The Head of The Organizing Committee of WIEOSB; believes that “the first objective is simply awareness. The fact is that there are already some excellent Severance Pay (EOSB) structures in the market. The take-up rate though is fairly low.” This means, according to Kelleher, that the extended objective is “to tie employers into the understanding that they can actually achieve a higher rate of employee participation in corporate profits by improving employee benefits- at no extra cost!”.
Kelleher explains: “Firstly, there is already a balance sheet cost to managing EOSB Liabilities. Under corporate UAE law companies are mandated to account for the gratuity liability. But- they are not under any compulsion to fund that liability”.
Kelleher continued: “A well-managed EOSB scheme could be used to improve worker productivity through improved financial wellness at the same cost as what is already absorbed into the balance sheet.” The practical problem” says Kelleher, “is that mandatory funding –if it ever happened– would impede the cash flows of small and medium-sized companies. However- the UAE has already weathered a similar change when it enforced mandatory health care coverage. That was a cost which was managed in with very little complaint”. Employees are certainly not going to be complaining about improvements to their financial wellness.
At the UAE economy level, the thought of all 7 million expatriates funding schemes is certain to bolster the economy. As Kelleher says: “for the financial services sector- everybody funding something -will reduce monies being invested outside the country, and provide a significant diversification within financial services”. Insurance/banking/asset management might all feature amongst the new winners.
Amy Curlee, WIEOSB’s Senior Adviser at Mondial (Dubai) LLC the said: “The whole field of employee benefits needs to be thrown into flux to attract a different kind of employee for the 4th Industrial Revolution” continues Curlee, “what worked for the employees who constructed the buildings in the first place will not work for the employees who will work on the ideas, the technology, and the innovation which now needs to come out of those buildings”.
Curlee added: “It’s a sentiment which has attracted the patronage for the seminar of the Federal Authority for Government Human Resources (FAHR). “FAHR is one of the leading authorities on the subject of HR capital and its evolution in the region, we are privileged to be working with this highly thought of Authoritative Voice on employee benefits”.
The First Workers Incentives and End of Service Benefits conference includes a number of seminars and panel discussions to discuss a variety of topics around employee benefits and severance pay solutions.