The minimum salary in UAE, or basic wage in the UAE, is a fundamental part of the total salary that an employee receives. In addition, it is the basis for calculating other benefits that employees in a company must receive. Consequently, you must know what the regulations that govern this salary are like.
In this article, you will be able to understand these regulations and the importance they have for compensation and benefits. In addition, you will learn about other important aspects of the labor field of this world-economic power country.
Understanding Minimum Wage Laws
There is not minimum wage United Arab Emirates established by law, therefore, the base salary will be the one agreed upon between employees and employer. Likewise, the employment contract of the workers establishes the agreed amount, which must be signed by both parties. However, there are crucial aspects regarding the minimum wage as you will see below:
Importance of Minimum Wage
According to Emirati labor law, the minimum wage is important because it is the basis of the net salary of an employee. Also, its relevance is that it is the basis for calculating benefits, such as vacations and end-of-service bonuses. Below is a detailed breakdown of them:
Employees who work full-time will have the right to receive 30 days of paid vacation. In contrast, workers who have worked for only 6 months will be entitled to 2 days of vacation. Furthermore, the labor law in Article 26 establishes that the tip must be calculated by taking the established base salary.
Then the gross salary that the employee receives is equal to the basic salary plus benefits.
Gratuity for end of employment contract
This benefit is based on the minimum salary in UAE without any allowances, unlike the vacation benefit. This end-of-service payment is established by Article 31 of the new UAE labor law.
UAE minimum wage in 2023
As we have mentioned, there is no minimum wage in United Arab Emirates established in labor laws. This means that the law does not contemplate any fixed minimum salary requirement for employees. However, what it does require from the employer is that with the minimum salary set, the employee can cover all basic needs.
In addition, the salary to cover the requirements of a person must be at least between AED 3000 and AED 5000. Likewise, according to the MOHRE or Ministry of Human Resources and Emiratization, the employer must pay the salary on the first day of the following month. Similarly, if the contract does not specify it, the employer must pay the minimum wage in UAE at least monthly.
Additionally, if the employer does not pay within 15 days of the set date, he or she is violating this law. However, this may vary if the employee and employer agree on another payment frequency in the contract.
Basic salary, allowances, and gross salary
With a basic salary, all the allowances that the employee will receive will be calculated based on this. Some of these benefits are payment for telephone, housing, transportation, and school enrollment for children, among others. Likewise, the basic salary plus allowances is known as gross salary.
Hence, as with the minimum salary in UAE or basic, all these allowances will have to be set out in employment contracts.
Current Minimum Wage Rates
Although there are no fixed minimum or basic wage rates established, it does not mean that the law does not require paying a certain percentage of gross salary. Therefore, it is common for the basic salary to be 60% of the gross salary and the allowances to be 40%. For example, the minimum wage in Abu Dhabi is AED 15,300.
Another example of a set salary is the minimum wage in Sharjah. In that emirate, the ruler of this emirate increased it from AED 17,500 to AED 25,000 in 2021. Likewise, as we have said before, the law stipulates that the minimum paid covers the basic needs of the employee.
Furthermore, according to Article 59 of the labor law, no employee will pay for the purchase of goods or food in a store that belongs to the employer. Also, the employer may not transfer monthly wages to weekly wages or daily wages to weekly wages.
Changes and Updates
In the new labor law according to Article 27, the government will propose a resolution to determine the minimum wage of workers or any category thereof. Thus, the provision is likely to provide legislation on this issue of minimum salary in UAE.
Likewise, according to an analysis by local agencies, the minimum wage in the emirates may be between AED 600 and 3000 per month. However, it will directly depend on the qualifications of the employee and the employer. Furthermore, some international HR organizations estimate that the minimum salary in Dubai per month will be AED 16,500.
Determination of minimum salary in UAE
The prices of products and investments in the UAE depend on supply and demand, as it is a free market country. The same happens with the minimum wage in UAE, since it is an economic factor it is not exempt from it. Therefore, we will explain in detail how to determine the salary in the country.
In the United Arab Emirates, companies set the salary they will pay their employees following the laws of the country. Therefore, you will hear about both high-paying jobs and low-paying jobs as well. However, this factor depends on the level of skill and professionalism required by each particular job.
In addition, the authorities established what the minimum salaries should be according to the level of experience of the employee. Two examples of them are the following:
- The minimum monthly salary for a university graduate is AED 12000
- The minimum monthly salary for a qualified technician is AED 7000
Therefore, there is no general minimum salary in UAE for workers but it depends on the employer, the emirate, and the trade. For example, the minimum salary in Sharjah for a medical professional may not be the same in Abu Dhabi.
Pay salary in UAE
Ministerial Decrees No. 788 and No. 739 (2009 and 2016 respectively) establish the legal payment mechanism in the country. In this case, private companies, as well as those in the Jebel Free Zone Ali (JAFZA) must pay through the Wage Protection System (WPS). Thus, the employer must send a Salary Information File (or SIF) to a WPS agent.
In this way, the agent will be able to corroborate the payment with the Ministry of Human Resources and Emiratization. Therefore, the employer must pay through this regulatory mechanism of the minimum salary in UAE. Thus, the government ensures that companies pay their employees fairly and on time.
Minimum salary for health insurance in the UAE
The minimum wage in United Arab Emirates for a worker to qualify for health insurance is AED 4,000 per month. However, people who do not earn this amount of money can receive it under EDP. You can also find other insurance companies that can offer health insurance if you earn a lower salary.
Similarly, the Ministry of Health requires local companies to provide public health insurance to their employees. However, companies are looking for higher quality in private insurers. The cost of these depends on the provider and the level of coverage offered.
Analyzing Market Trends
The trend of the labor market in the Emirates is currently booming, becoming stronger every day. Thus, there are around 15 commonly sought-after jobs in companies in the United Arab Emirates. Next, you can see the trend according to the surveys:
Job Market Dynamics
In the UAE, the hiring and job market trend has given new hope to expatriates. Thus, 70% of industries in the UAE seek to employ workers based on their qualities and skills. Likewise, 50% of companies will hire foreigners who are available for 3 months.
In addition, companies increased their minimum salary in UAE and other salaries to attract skilled emigrants. Just as 86% of active professionals believe that their prospects will improve over the next five years.
Official Guidelines and Resources
The minimum wage in Abu Dhabi and other emirates is not only an attraction for those who want a legal job in the country. In this sense, the projects and initiatives of the public and private sectors have allowed a growth in employment offers. The fastest-growing sectors in the labor market of the country are technology and Human Resources.
This panorama differentiates what is happening globally since the local market saw an expansion in the first quarter of 2023. For example, in the central offices, and in specific sectors the increase was 20%. This aspect has served to boost the confidence of recruiters who have witnessed the economic boom of Dubai and all the country.
Thus, the authorities of the nation have been able to take advantage of the new projects and initiatives implemented. This is due to the precise and carefully detailed planning in the United Arab Emirates. The sectors in which there has been the greatest growth and that continue to develop are the following:
Information technology (IT)
This labor sector contributes to the economic development of the nation through innovation and scientific advances. Additionally, IT is the third highest earning sector in this Middle Eastern nation. One estimate of the potential of information technology is that there is potentially $1 trillion to be exploited.
Similarly, the percentage that this sector contributes to the GDP of the UAE is 4.3%. In this case, the sector is looking for qualified labor, since in the country there is a shortage of talent for this sector. An IT professional can earn a minimum salary in UAE of around AED 6,500 per month.
Finance and Accounting
Another of the sectors with the greatest demand and substantial growth in the country is finance and accounting. As in the previous case, talents in these professions are scarce in the UAE. In this case, the Abu Dhabi minimum wage or in another emirate for professionals in both fields can be AED 7,500 per month.
Sales and Marketing
Sales and marketing are two of the professions with the most demand today in the United Arab Emirates. The hiring of employees in this labor sector increased by 20% and will continue to increase in the coming years. More than half of employers in the UAE are looking for qualified professionals in both areas.
The minimum salary in UAE that you can expect to receive as a professional in any of these areas may be as follows:
- Sales, an average of AED 5,500 monthly
- Marketing, an average of AED 5,845 per month
Tourism in the UAE is a sector that contributes significantly to the economy of the nation. Furthermore, this sector has continued its sustained growth since it began to become known as a global tourist destination. As a professional in the tourism sector, you can expect to receive around AED 8000 per month, in a diverse area.
Thanks to advances in health, specialists in this important sector are in high demand in the country. Over the next 5 years, experts expect the shortage of these native professionals in the country to worsen. However, the country has received a large number of expatriate health professionals for some years.
In this case, a specialist health professional can have a minimum salary in UAEbetween AED 5,000 and AED 15,000 per month.
Employment situation in the United Arab Emirates
As businesses expanded to meet the demand for products and services, the labor sector did as well. Furthermore, the strategic plans of government authorities have helped economic growth. Likewise, the expansion has reached the most diverse industries, which range from tourism to aviation.
In this way, foreigners who have the necessary skills and qualifications can enter the country to work. However, they must take into account that they must have the legal requirements, such as a permit and a work visa. If you want to know about job opportunities and how to work in the UAE, just contact us.