The UAE’s new visas could support construction freelancers and SMEs

The UAE's 10-year visa and reforms to its existing foreign worker visa system may spur the rise of regional construction freelancers

The UAE's new visa laws and updates will boost construction SMEs.
The UAE's new visa laws and updates will boost construction SMEs.

It has been an interesting few weeks for UAE residents, with a plethora of new visa laws being introduced, and existing ones being updated, all of which is expected to have a significant impact on businesses operating in the country.

The new 10-year visa, announced on 21 May, may also spur the emergence of a previously uncommon breed of worker in the Middle East: the independent construction professional.

READ: Developers laud UAE's 'landmark' long-term visa

Worldwide, freelancers are an essential part of the workforce in industries such as business consulting, information technology, and media. However, freelance construction professionals remain a rarity, both globally and regionally.

The fact that construction projects are long-term endeavours might be partly responsible for the industry’s fixed-employment trend. And the construction sector’s lack of ‘disruption’ – technology-driven or otherwise – may also be a factor. After all, freelancers bring a level of flexibility that, while essential in some industries, might not be suitable for the systematic and ordered nature of construction work.

However, global examples show that the Middle East – and particularly the UAE – could stand to benefit if the concept of construction freelancers was more widely adopted. Top-level data from a study by Hudson Contract and the UK’s Centre for Research on Self-Employment shows that working with freelancers leads to productivity gains and labour cost savings of up to 86% per project – and it may also help to de-risk schemes and make acquiring development finance easier.

The February 2018 study, titled The Economic Role of Freelance Workers in the Construction Industry, claims “genuine freelancers play a pivotal role” in the construction sector’s economic health. It adds: “[Freelancers] are not entrepreneurs, but enable entrepreneurship, and their unique contribution must be recognised and valued.

“[Freelancers can help] the construction industry adopt lean entrepreneurship management techniques. These allow lower fixed and sunk capital costs for each building project.

“They also make firms of all sizes much more agile and flexible, [allowing] small- and medium-sized enterprises (SMEs) to compete with larger firms, because if freelancers are available, there is no need to have a large internal employee workforce to cover a diverse range of labour skills.”

The UAE’s foreign worker visa regulations, announced earlier this month, display its awareness of the advantages associated with both independent professionals and SME growth. Some of these reforms include the removal of the mandatory $816 (AED3,000) bank guarantee for visas, which is expected to return $3.8bn (AED14bn) to the private sector; and the introduction of a low-cost annual insurance premium of $16 (AED60) per visa in place of the current bank guarantee system, as well as a six-month visa for job-seekers. UAE consultancy, Banks Legal, said these reforms would “increase the pool of talent available for employment in the UAE and make it easier for employers to […] evaluate potential hires”.

READ: Industry reacts to UAE's 'game-changing' economic reforms

Additionally, the move will also be particularly helpful for SMEs, a category that numerous specialised or single-disciplinary construction companies would come under. As Banks Legal explained, the bulk of an SME’s “burdensome” base costs is often taken up by employment-related expenses, which can be “a barrier to growth”.

Of course, the impact of these legislative updates won't be visible overnight, as Marcus Taylor, managing partner at construction recruitment firm, Taylor Sterling, explains. Commenting on how the 10-year visa might impact local firms, he says: “I would suspect that a 10-year visa, although attractive simply down to convenience, would come with a price tag.

“If it is employer-sponsored, then it would also put more risk in the pocket of the company, unless there is a graded structure or some kind of protection against the initial expense.

“If the visa is fully independent of the employer, then it would make a huge difference in the ability to move jobs within the region,” Taylor adds.

Only time will tell exactly how both sets of new visa regulations will impact the UAE’s construction businesses – and the wider economy – but local building employers in pursuit of cost, time, and labour efficiencies should begin to explore how the legislation can be leveraged to optimise operations.

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