Thursday, September 20, 2012

Capital Calling

A new Abu Dhabi government decision mandates that all employees of the emirate's government or government-owned bodies must reside within the emirate, if they want to keep their housing allowance. Such a policy has already been in place for some emirate-owned companies, such as Etihad Airways, but it has now been extended to any entity under the emirate's wing. The majority affected will obviously be those who commute from Dubai, and a year is to pass before housing allowances are to be withdrawn from salaries of those who fail to comply.

Concerns are already being raised, but the root cause of the vast majority of these is that the mandate is being retroactively applied i.e. added to the contracts of everyone in organizations to which the mandate is applicable, even when the hires were made before this decision was reached. Many persons who work in Abu Dhabi and have long been in Dubai have, by then, settled themselves and their families into a way of life tailored to Dubai.

As anyone who has been to Abu Dhabi knows, the road system is still going through growth pangs, as the network makes a transition from the older traffic signals and grid layout to a more streamlined system of underpasses, flyovers and interchanges to which Dubai-dwellers are accustomed. The urban zone is expanding onto the mainland and other islands, but much affordable residential space has yet to come to market, and facilities for residents like restaurants, nightclubs, public transportation (read: metro), malls, theaters, galleries, pavilions, entertainment complexes and lifestyle centers have a long way to catch up to Dubai's level in both quality and quantity. This is not an indictment of Abu Dhabi, but merely a recognition of the reality that has already been pointed out by commentators such as Khalid al Ameri.

Then there is the parking issue on the island, which has resulted in chaos and frustration in many parts of the city, thanks to lack of a policy to ensure packaged parking in building construction until the last couple of years. Where the parking meter system has been implemented, people have to park and take a bus or taxi from hundreds of meters away from their own homes. The only way to get away from the city's parking woes is to move off the island to the satellite islands or mainland locations like Al Raha, Khalifa City and Shahama. But that, again, means losing out on access to aforementioned lifestyle options.

Those who live with spouses/siblings/children working in Dubai will be faced with a much harsher dilemma. These families will be either be torn apart or lose breadwinners, unless the Dubai-employed spouse/sibling can find a job in Abu Dhabi, which will put additional pressure on the Abu Dhabi job-seeker's market. It gets even more complicated when families with children have to transfer the latter to Abu Dhabi schools. This will increase demand for slots in Abu Dhabi's schools, especially when it comes to children who have been educated in a specific syllabus. Family issues aside, there are the social circles that will be stretched, possibly to breaking point. And this is not to mention those who not only live in Dubai, but have taken property in Dubai to live in on a rent-to-buy basis, and will now have to find tenants at likely lower rents.

So this is not an entirely negative move, according to those behind the decision. The claimed benefits will include less commuting stress and fewer highway accidents. I know of a few people who have made a move to Abu Dhabi when the stress got to them. That was their choice, though; they decided that the trade-off weighed in that direction when considering their tastes and circumstances. Clearly, for the others, the long commute was worth what they had going in Dubai. And as for highway accidents, better enforcement of speed limits and road discipline would help much more than simply reducing the number of cars on the road. You still see drivers zipping along at 160 km/h on  a 140 km/h highway, weaving through traffic and flashing anyone who cares to actually observe the speed limit. Besides, many people who are used to living in Dubai will probably head there right after work to attend to their evening social engagements, and then head back in the night, which could result in far worse highway accidents involving tired, full-bellied drivers in the 22:00 - 01:00 period.

For the affected employees, there are few ways out. People might try to register residence with a friend or relative in Abu Dhabi while living in Dubai, but I suspect now that Abu Dhabi is cracking down on apartment sharing, this too might become impossible. There is, of course, the possibility of renting accommodation in both cities, but that would be prohibitively expensive for most. Another way out is to have an arrangement with a trusted Abu Dhabi resident, also working in Abu Dhabi, but in the private sector. You would register tenancy for their place in your name and they would register tenancy for yours in their name. This would follow the letter of the law (assuming a tenancy contract is the evidence for living in the emirate). Since private sector employees are not penalized on housing allowance with regard to living in other emirates, this would not be a problem for the private sector Abu Dhabi resident, while you would meet your requirement of having an Abu Dhabi tenancy contract in your name.

Anyway, for those who don't engage in such loophole tactics, some will resign and settle for jobs in Dubai. Others will suck it up and move themselves and their families to Abu Dhabi. Of these, some will move to Al Raha, Khalifa City or Shahama, and hightail it to Dubai to spend the evening after work, while the rest will try to make do with whatever's are available in Abu Dhabi.

There are other questions in the grey. Will people being hired during the grace period have to move directly to Abu Dhabi, or can they also stay in Dubai on housing allowance until September 2013? And if you are a working couple or family, will all except for one housing allowance get clipped if the tenancy contract and bills are registered in the name of one person? Which is to say, how do you prove that you live in Abu Dhabi, if the bills are being paid in the name of just one of the people with whom you live? Also, will housing allowances be adjusted in accordance with the pricier rent situation in Abu Dhabi? Yes, I'm very curious as to how all this will get sorted out.

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