Dubai: The total annual cost of labour is estimated at about Dh55,000, according to a paper presented at the Cost of Labour workshop organised by the Ministry of Labour and Dubai Economic Council yesterday.

The cost for a skilled worker is Dh144,000 and the cost of an unskilled worker is Dh33,000, said Dr Mouawiya Al Awad, Director of the Institute for Social and Economic Research at Zayed University, at a session on the components of labour costs.

The overall average annual administrative and recruitment costs per worker are estimated at Dh2,674. For skilled workers the cost is Dh3,404 and for unskilled workers Dh2,296.

Wages and both cash and non-cash benefits are estimated at Dh41,000 per worker annually, he said.

The annual cost of a skilled worker (Dh129,302) is almost seven times the cost of an unskilled worker (Dh18,925).

The overall social cost across skill levels is approximately Dh11,559 after paying government fees.

Despite these costs, hiring foreign workers is an economic advantage to private companies and the UAE economy when comparing the costs of productivity levels, according to the study.

Recommendations

This suggests that competitiveness of the UAE economy may be "linked strongly" to using cheap and unskilled workers, he said. Al Awad concluded with a set of policy recommendations that emphasised the importance of shifting to a less labour-intensive system and to satisfying the future needs of a growing number of UAE nationals.

Skilled workers needed

A skilled worker will yield Dh500,000 in terms of productivity but labour costs are only Dh144,000, according to a study presented at the Costs of Labour workshop yesterday.

The competitive edge of the UAE is based on unskilled workers, said Dr Mouawiya Al Awad, Director of the Institute for Social and Economic Research at Zayed University, at a session on the components of labour costs.

With the UAE heading towards a more knowledge-based economy, there is a need to hire more skilled workers and reorganise the labour market to meet this vision, he noted.

Currently, the private sector is composed of 20 per cent skilled workers to 80 per cent unskilled workers, he said.

It would cost the UAE Dh22 billion to shift towards a 40 to 60 ratio of skilled to unskilled workers—but this shift must be done, he said.