Re-engaging retired employees

At a time that all GCC countries suffer from a huge imbalance in their employment and demographic structures, many laws and legislation do not contribute to solving this problem. Instead, they complicate it further.

Among these are the pension and social security regulations that allow GCC nationals to retire at an early age - not exceeding 40 in most cases.

This has resulted in many GCC citizens leaving the job market, despite the fact that huge amounts of money were spent in educating and training them in all fields.

To replace these pensioners, more foreign workers have to be recruited. In turn, this means more remittances are set to be made from GCC countries to the expatriates' countries of origin. These transfers increased by 31 per cent from $30.5 billion (Dh112 billion) in 2007 to $40 billion in 2008.

Although GCC countries will need millions of foreign workers - who play a significant role in the development and implementation of projects - there must be a balance between the numbers of national and expatriate workers in the region.

A very important law was issued last week by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. The law permits the appointment of retired military and civil employees in Dubai.

The law stipulates that the appointed pensioners will receive a monthly gratuity equivalent to the remuneration of their employment degree or military rank, according to which they were appointed, provided the rules of the human resources department are applied. Such a law will have many economic and social benefits.

On one side, it would reduce remittances to other countries and increase savings. The law stipulates that the rehired employees will receive a monthly stipend so as not to deprive them from their monthly pension.

Meanwhile, many pensioners in GCC countries suffer from time wasting, which reflects negatively on their social ties, reduces the state's productivity and dents the state's revenues as well.

Therefore, one important aspect of this law requires authorities to look into the possibility of implementing it at a federal level and across GCC countries, where pension schemes are similar.

Accordingly, it may be advisable to reconsider pension and social securities laws in GCC countries that allow early retirement at the age of 40.

It is necessary to make the compulsory retirement age 60 for men and 55 for women, in keeping with pension schemes in advanced countries. This will also enhance the economic and demographic situation in GCC countries.

For example, pension schemes in the United Kingdom are reconsidered from time to time. In the late 1990s, the retirement age for women was raised from 60 to 65, just as for men.

Lately, the pension law was amended to raise the retirement age for both men and women to 68. This amendment will take effect from April 6, 2020. The change was made to cope with progress achieved in raising the average life expectancy from 72 to 78 over the past two decades.

Since the average life expectancy in GCC countries is closer to this figure, activating national work forces has become a very important issue for economic growth and the demographic structure in these countries.

In addition to its economic and social outcomes, the law has been welcomed by pensioners in Dubai - most of whom are still at a productive age and look forward to serving their nation after gaining the necessary academic and professional experience.

Needless to say, many of these people had to retire for reasons that were, for a period, out of their control.

Other GCC countries, and the General Secretariat of the GCC must study this law to draw lessons from it. They should work to implement it as pensioners aspire to contribute to the economic and social development of their countries through the activation and employment of their stalled energies.

Dr Mohammad Al Asoomi is a UAE economic expert.