The National - UAE’s weekend change to boost economic competitiveness

Bal Krishan, Special to The National December 8, 2021

The UAE’s move to shift its weekend to Saturday and Sunday could result in greater integration of the local economy into global markets and boost its competitiveness by attracting more foreign direct investment into the country, analysts say.

The Gulf country relies extensively on foreign trade, tourism and logistics to fuel its economic engine, making the recent move to align the weekend to global standards an important economic milestone.

“It will help boost the UAE’s competitiveness with its external-focused economy and to have the same weekend days as the rest of the world,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

“It will also be more attractive for companies, particularly with the visa reforms the government has undertaken. It will boost sectors including tourism, trade and financial flows.”

On Tuesday, the UAE announced that federal government departments would shift to a four-and-a-half day working week, with the official weekend now being Saturday and Sunday, instead of Friday and Saturday.

For companies and particularly those dealing with global markets, the move will lead to a greater economic integration.

“The reform will mean that the UAE's banking and financial markets will gain a full working day in common with international financial markets, leading to greater efficiency and increased productivity, since the banking and financial sector will likely open all of Friday,” said Nasser Saidi, founder and president of Nasser Saidi & Associates.

“This supports banking and financial deals/transactions and flows, with banks and equity markets being able to undertake operations/transactions on the same days as most of the world, increasing the UAE's financial integration with global markets and reducing the current overnight risk of deals and operations, including for the all-important oil markets.”

Aligning the workweek with global standards would mean fund transfers would also be smooth, particularly within the banking sector, experts said.

“Previously since Friday was not functional, fund transfers from and to UAE had to suffer a lag of three days,” said Bal Krishen, chairman and chief executive of Century Financial, a UAE-based financial consultancy.

“The additional day or the lag can be an issue in the working capital management and cash cycle of companies operating with a narrow margin. The new working week will also bring the UAE’s financial sector into closer alignment with global real-time trading.”

The UAE, the second-largest Arab economy, is currently the top financial centre within the Gulf. Its two international financial centres host the regional offices of international banks, insurance companies, asset managers and many others.

The country also has a more advanced physical and social infrastructure, and is ranked as the most business-friendly location in the region. This is set to be cemented with the latest move, according to Dean Kemble, managing partner at GSB Capital, a DIFC-based wealth management company.

“While this will support economic development, the changes will also elevate the UAE further as a country focused on the social benefits of its citizens and residents. This will likely lead to further inward investment and a greater number of people wanting to move to the UAE to live and work.”

However, the private sector will have to follow the government’s lead in shifting to a Saturday-Sunday weekend for the full impact of the change to be realised, said M R Raghu, executive vice president at Kuwaiti asset management company Markaz.

Currently, the private sector is not required to shift to the new weekend, Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, told The National, emphasising that private sector companies will decide “based on what they feel that will improve their position".

“The move to a Saturday-Sunday weekend for the federal government needs to be mirrored in the private sector, building on the cohesive strategy of attracting businesses and investments into the region through a variety of legal and regulatory reforms and ease of establishment (visas, residency liberalisation) and related measures that were introduced during 2020 and 2021,” Mr Saidi said.

Considering the various economic and market benefits, the companies should be willing to make this move, Mr Raghu said.

“Large private sector companies with a global footprint are expected to follow them. On the other hand, small companies and start-ups, which mostly operate locally, might take some time to adapt.”

At Century Financial, Mr Krishen said he would opt for a Saturday-Sunday weekend to better align his employees. Many of his colleagues currently follow a Monday-Friday workweek since they deal with global markets.

“If all employees have the same work schedule, it is bound to increase the company's overall productivity. Moreover, it will help reduce the stress of some employees who have to work a different schedule,” Mr Krishen said.

The UAE became the first country in the region in 2006 to shift its weekend to Friday and Saturday from the previously followed days of Thursday and Friday – a move that was mirrored by the rest of the Gulf countries later.

Having taken the lead yet again, the Gulf country could strive ahead in economic competitiveness once more.

“Among its GCC peers, it would definitely make the UAE more competitive, since it is better aligned with the global working norms,” Mr Raghu said.