DUBAI: Retirement capital could provide a significant boost to developing economies, with nations in the Gulf Cooperation Council (GCC) among the top 20 most likely beneficiaries, according to a report released today by the World Governments Summit in collaboration with Mercer, a global leader in redefining the world of work and a business of Marsh McLennan.
An estimated 169 million workers of all levels of income were employed outside their home country in 2019, according to the International Labour Organisation (ILO). Of these, more than two-thirds (67.4 percent) had moved to high-income countries, with a further 19.5 percent living and working in upper-middle income countries. That number is expected to continue to grow as workforces become more mobile and have more choices over where they live, work and retire.
Mohamed Yousef Al Sharhan, Managing Director of the World Governments Summit Organisation, said, ‘In today’s globalised and interconnected world, world-leading talents have the world at their fee
t. For the Gulf nations to continue attracting, and retaining these talents, they must find ways to continuously incentivise them to come and stay in the long-term. This report makes this point clear, and through our work with Mercer, the critical importance of retaining expatriate wealth and experience has got the attention it needs so that leaders and policymakers can make more informed decisions about maintaining and elevating the attractiveness of their work and business environments.’
The report also shows that the technology and financial services sectors tend to have the most opportunities for expatriate workers. Some countries are actively encouraging technology companies and start-ups to relocate to newly created tech hubs, while multinational financial institutions are looking to hire or move employees to offices in global financial hubs.
The economic benefits of attracting highly skilled professionals include advancing knowledge transfers, enhancing innovation and entrepreneurship, and raising le
vels of consumer spending. In addition, by encouraging labour pools to invest directly into host countries during their working lives, and retaining that investment after retirement, nations can leverage an important source of capital.
Increasing expatriate populations is central to the growth and economic development plans of several countries in the Middle East. The UAE, the Kingdom of Saudi Arabia and Oman have all adopted measures to make it easier for people to move there for work, in recent years. Governments are increasingly encouraging the employment of workers in key sectors where expatriates can enhance the knowledge pool and contribute to growth targets.
‘We are witnessing a global rise in the competition for the expatriate ‘silver dollar’ as working populations live longer and retire earlier. GCC countries like the UAE, because of their significant proportion of high-net-worth international expatriates, could benefit from more expatriates staying in their host country for retirement. By undertak
ing a range of social and financial reforms that make it easier to save, access and move money, there are a number of economic benefits for countries like the UAE who can retain a mobile and affluent demographic into retirement’ said Robert Ansari, Wealth Leader, Mercer IMEA, a co-author of the report.
The report also examines the pioneering work taking place in the UAE to address expatriates’ currently unmet economic needs. With expatriates and other foreign workers making up approximately 90 percent of the population as of 2021, the UAE stands to reap significant benefits if it can deploy an effective retirement capital-retention strategy.
The authors cite the example of Dubai International Finance Centre (DIFC), which overhauled its end-of-service benefit programme in 2020 and launched DIFC Employee Workplace Savings (DEWS). DEWS is a defined-contribution retirement plan, where employers pay monthly to provide employees with a savings pot. Employer contributions start at a fixed percentage of an employee
‘s monthly salary, which rises after five years of service, and participation is mandatory for all companies registered in the DIFC.
Local economies can reap significant potential benefits by creating a savings vehicle for expatriates, meeting the saving needs of this population comes with important considerations. Governments are introducing new policies in parallel to ensure that nationals are not disadvantaged by the influx of expatriates.
‘From increasing spending within the local economy to helping to address demographic and competitiveness challenges, expatriate communities play a major role in ensuring sustainable economic growth. We are seeing a rise in the number of organisations in the region looking to develop long-term savings vehicles to attract and retain talent,’ said Ansari.
Source: Emirates News Agency