Effect of Absence of Pension in UAE (Part 3)

1.3. Research Objectives

This research intends to focus on the importance of a federal pension scheme and its influence on the loyalty and motivation of BTN foreign employees and on the long term success of the company. Motivation is a very important factor in increasing the productivity of the workforce and also to increase the loyalty of employees. Motivation is created through the creation of positive steps of the management of a firm which gives confidence to employees that there work and time spent in the company would be compensated in the most ideal way and their resources will be well developed in the current organization.

The main objectives of this study are:

·         To identify the impact of the absence of a federal pension scheme in the UAE on the loyalty and retention of BTN employees.

·         To identify the influence of the staff loyalty and motivation on the long term success of BTN company.

·         To give suggestions to improve employees loyalty, retention and motivation.

·         To draw conclusions about the applicability of a pension scheme in UAE.

Chapter 2: Literature Review

2.1. Pension Systems in UAE

The absence of a pension policy is now under serious discussion at all the important forums in UAE. The Federal National Council of the country is responsible for advising on new laws and programs for people. There have been many active debates in the council of the topic of retirement and pensions. There has been a lot of sound support for pension schemes. Currently, different private firms provide gratuity funds in the UAE which deliver onetime payment to an employee who is retiring from the fund. There is a lot of room for improvement and enhancement in this regard. The pension schemes must also be available for both nationals as well as expatriates as the economy of UAE is run and fuelled by millions of expatriates working away from home countries for the development and running of United Arab Emirates. A state run fund is necessary for the country just as it is found in most countries around the world. UAE pays high salaries to employees when compared with most countries but firms working in the country have the lowest employee retention rates due to the absence of long term pension or retirement plans in the country. A starting plan can be a mutual retirement fund available for employees through personal choice. Such a fund would be managed by state and all the registered workers in the country will have the choice of paying in that fund. This will encourage people as well as private firms to become part of the pension fund and investments will gradually increase in the system making it more stable and prone to success. State run pension plans are available in most countries around the world and there is no issue that such systems will face any problem in UAE where state funding is not a problem and most private firms are also stable and not short on funding in the country (Khaleej Times, 2014). Currently, public sector salaries are higher than private sector salaries for nationals. A more powerful scheme can be set up for nationals to encourage them in working for private sector organizations. A common scheme will also be present to cover all employees working anywhere across UAE. Such retirement schemes will ensure that employees who work in the private sector will feel more secure at their jobs and will remain at their companies for a longer time period. Employee retention will improve nationally especially in the private sector and we will see an improvement in the overall employee productivity across the country. There are many benefits of such funds. One advantage is that the money remains on the soil of UAE and the state will be able to invest it and earn more money on a national level. The expatriates would also receive more funds at their retirements and they may choose to remain in the country and therefore take part in improving the economy of the country. Pension funds are huge investors in most developed countries and this model can be successfully repeated in the UAE. A pensions plan is also successful in creating a sense of responsibility in people and they become more serious about their future and their method of savings and job choices (Terry & White, 1997: 160-175).