The GCC today: Signs of progress and adaptation

The GCC today: Signs of progress and adaptation

<div data-w-id="6f432b6d-6d12-14aa-7867-c3d125c7252e" data-wf-id="[&quot;6f432b6d-6d12-14aa-7867-c3d125c7252e&quot;]" class="div-block-173"><div data-w-id="3b65cc6f-41fa-1a56-1c6f-5d52274b3322" data-wf-id="[&quot;3b65cc6f-41fa-1a56-1c6f-5d52274b3322&quot;]" class="div-block-174"><div data-w-id="0ee6813b-adf0-0bff-f769-fe9c9ac46ffd" data-wf-id="[&quot;0ee6813b-adf0-0bff-f769-fe9c9ac46ffd&quot;]" class="card--m8p24 centralise"><h3 data-w-id="9b177abf-18f7-01e3-a8a7-26fd5d8d7649" data-wf-id="[&quot;9b177abf-18f7-01e3-a8a7-26fd5d8d7649&quot;]" class="text-h2--ondark">$400bn <span data-w-id="ca6a1be2-9181-eee4-4a68-9e33ac5c16ab" data-wf-id="[&quot;ca6a1be2-9181-eee4-4a68-9e33ac5c16ab&quot;]" class="white-thin">estimated total value of EoSG liabilities currently on the balance sheets of companies across the GCC</span></h3></div></div><div data-w-id="3edf0a01-52f0-934f-5a0a-aaacfdeaaa13" data-wf-id="[&quot;3edf0a01-52f0-934f-5a0a-aaacfdeaaa13&quot;]" class="div-block-174"><div data-w-id="36edb827-601c-99c3-683a-ac5a07ef1a10" data-wf-id="[&quot;36edb827-601c-99c3-683a-ac5a07ef1a10&quot;]" class="card--m8p24 centralise"><h3 data-w-id="5fdc715a-2ab7-d03c-6100-3b42246ef103" data-wf-id="[&quot;5fdc715a-2ab7-d03c-6100-3b42246ef103&quot;]" class="text-h2--ondark">$60bn <span data-w-id="b7a48c0e-c20e-065c-0665-2f8035435e51" data-wf-id="[&quot;b7a48c0e-c20e-065c-0665-2f8035435e51&quot;]" class="white-thin">estimated annual contributions on a DC basis that would be paid if all GCC countries made similar local labour law changes to those made by the DIFC</span></h3></div></div></div>


Though the GCC has been relatively slower in adopting this trend towards a funded DC system, it is now showing promising strides towards alignment with international best practices. Noteworthy is Dubai’s pioneering step in becoming the first GCC territory to mandate auto-enrolment for expatriates into DC savings schemes as of 2020 in the DIFC Free Zone. Named the DIFC Employee Workplace Savings (DEWS) scheme, this initiative has recently expanded to include all public sector entities in Dubai. Furthermore, the United Arab Emirates announced in September 2023 that enrolment into DC schemes would become a voluntary option for companies, in lieu of the traditional EoSG system.

In Oman, a new Social Protection Law has been recently enacted to offer unified social insurance coverage for Omani workers, harmonising eligibility conditions and benefit formulas into a single scheme. Among these reforms is the creation of an adaptable, segmented workplace savings system in Oman, including a new provident fund for non-Omanis. The full suite of these reforms is expected to be rolled out within three years.

Both the Oman and UAE reforms reflect a broader willingness within the GCC to modernise and align with international norms, providing more secure and transparent benefits for employees and lessening the financial burden on employers. In this context, employees gain financial security, more transparent investment choices, and in some cases, the opportunity for customised, culturally aligned investment options like sharia-compliant funds. Employers, on the other hand, benefit from a more manageable cash-flow scenario and better alignment with global corporate benefits structures.