The UAE is considering the potential impact of a minimum wage for its lowest-paid workers. Experts say the measure could improve living standards but may also affect business costs. The country attracts workers globally by offering opportunities that surpass those in their home countries.
Lower-skilled expatriates in sectors such as construction, hospitality, and retail form a critical part of the UAE economy. Introducing a minimum wage could help retain talent and ensure fair compensation. Frederic Schneider, an economist, noted that a growing workforce increases competition and lowers labor prices. He added that a minimum wage could help the UAE remain attractive for foreign employees.
However, Brett Preston, chief HR officer at Ghobash Group, warned that higher wages might not automatically improve workers’ living conditions. Many low-paid staff send the majority of their earnings back home. Consequently, salary increases may primarily benefit families abroad. Still, sending more money could improve overall welfare for these workers’ households.
Business owners also recognize potential benefits. Racha Makarem, co-founder of a UAE translation and events company, argued that a fair minimum wage can reduce turnover and improve employee motivation. Employees working long hours in physically demanding jobs would feel more valued. She also suggested phased implementation to allow companies to adjust to new costs.
Higher wages can encourage productivity improvements, which might mitigate concerns about inflation and higher operating costs. Firms that meet industry benchmarks can attract better talent and strengthen overall performance. Experts note that the government must balance worker support with maintaining a competitive business environment. Too high a minimum wage could raise labor costs and affect investment attractiveness.
Events in Qatar provide insight. There, minimum wages cover all nationalities and include additional allowances for food and housing. Initial outcomes show that a significant portion of low-paid workers received salary increases, demonstrating tangible benefits. Proper implementation and monitoring remain crucial for success.
Economists also warn of potential workarounds, such as informal employment or inaccurate reporting of working hours. Authorities must combine minimum wages with broader labor rights protections, living standard improvements, and coordinated oversight. The ILO continues to advise Gulf countries on policy options for minimum and living wages, emphasizing dialogue among governments, employers, and employees.
Overall, a minimum wage in the UAE could enhance fairness and employee satisfaction. However, careful planning and phased introduction are necessary to prevent economic distortions while supporting the workforce.
