Red tape sees small companies recruit from abroad

Hiring workers already in the UAE means wading through an expensive sea of red tape that can be further complicated by former employers who want to avoid competition.

Smaller companies are choosing to hire abroad rather than wade through a sea of red tape to recruit from within the country.

Local entrepreneurs claim complex legal constraints and possible expenses surrounding the transfer of employment, visas and sponsorships make it difficult for new companies to take on workers already living in the Emirates. To make matters worse, they say, some companies abuse the system in a bid to prevent former employees being hired by competitors.

"You run up and down and nothing happens, then you say forget it," said Razak Abdul Kadi, the owner of two Pakistani restaurants in Ajman. A year ago Mr Kadi wanted to hire a food delivery driver for his restaurants. The driver had just finished his previous contract and was looking for another job. "I tried to negotiate with the [former employer] on numerous occasion but he refused to release him. He said he must go back to Pakistan and he put a six-month ban on the driver," said Mr Kadi.

After a second attempt with another driver resulted in the same outcome, Mr Kadi gave up trying to recruit domestically. "I didn't want to waste any more time on this, so I got a driver from Pakistan but it was bad since he had to learn everything from scratch, from roads to the business culture here." Another entrepreneur, Marisa Tereslova, brought in two girls from Russia to work in her beauty salon in Dubai after several unsuccessful attempts to hire locally.

While the Ministry of Labour does allow new employers to pay to lift a work visa ban put in place by a previous employer, it is an unwanted extra expense for smaller businesses. "The sponsors of the girls I wanted to hire here asked for compensation," Ms Tereslova said. "I had to pay some fine for both of them at the Ministry of Labour and because I don't speak Arabic, I was advised to hire a public relations officer to help me.

"All these are additional costs, which I did not budget for. So when I compared the cost and the inconvenience, I decided I will be better off getting the girls from Russia.". Managers who do hire locally say there are advantages. Yunib Siddiqui is the managing director of Jones The Grocer restaurantin the UAE, an Australian food chain that opened its first outlet in the capital last summer. He said he was aware there were some restrictions on transferring work visas from one employer to another but had not anticipated the length and complexity of the process.

In the end, however, he persevered. "I wanted to hire from within because I knew I would get the people who know the environment and the culture here," he said. Under the labour laws, employees seeking to transfer to new jobs must get the approval of their employment visa sponsors. On completion of an employment contract, or a mutually agreed notice period, a worker must obtain a No Objection Certificate (NOC) from the visa sponsor to enable him or her to transfer to a new sponsor.

"Even though the spirit of the law may be good, it gives an opportunity for abuse where a sponsor may decide to put a ban on a worker he no longer wants, just so that worker cannot go [to] work for someone else," said Mohammed al Hammadi, the owner of MyLife, a recently opened men's boutique in the capital. Proponents of the current system say they welcome the fact the laws are designed to make it difficult for workers to transfer from employer to employer.

"It is expensive to bring someone here, and it is expensive to train workers to fully understand how business works here," said Mohammed Khalfan, a Dubai businessman. Amir Thuraiya, another Dubai businessman, agreed. "After you invest so much on somebody, they can't just decide afterwards that they need to go and work for somebody else. That is why it is right to refuse them the NOC, to put a ban on their employment and to return them to their home countries," he said.

Meanwhile, another problem small and medium-sized businesses face is accessing funds. The Government this week urged banks to boost lending after it emerged the sector accounted for just 2 per cent of total lending across the Gulf.