A growing number of companies in the Gulf Cooperation Council (GCC) region are making some job cuts, employment market specialists have confirmed.
GulfTalent, in its latest report based on the feedback of 700 employers and 25,000 professionals in the region, revealed that Saudi Arabia tops the list in terms of the number of private sector firms planning to implement redundancies this year, at 14 per cent.
Second on the list is Oman, where 10 per cent of companies intend to trim their workfoce, followed by the UAE (9 per cent) and Qatar (8 per cent). GulfTalent could not find sufficient data for Kuwait and Bahrain.
“An increasing number of firms have been reducing headcount, particularly in [the] energy and construction [sectors],” the firm said in a statement sent to Gulf News.
There will also be a “marked slowdown” in recruitment activity. “Employers [are] much more cautious in adding to their payroll. Much of the recruitment activity is now focused on replacement hiring only,” said the report.
However, experts assured that the UAE remains one of the resilient economies in the region. In fact, nearly half (48 per cent) of residents in the UAE have a very positive outlook on the future of the country’s economy, according to a separate survey by Bayt.com.
Besides, GCC states are expected to have stable currencies and register a positive economic growth in 2016, with governments using their reserves to maintain critical investments.
Certain sectors, including retail, have also experienced only “limited impact”, while other industries are still offering employment opportunities. The medical industry, in particular, is booming, with nearly seven in ten (68 per cent) companies in the healthcare business reporting an increase in their headcount during 2015.
Michael Gilmore, managing partner for property and construction at Morgan McKinley in Dubai, said “hundreds” of payroll reductions were reported in the construction sector alone during the first three months of the year.
“It’s clear that there have been hundreds of job cuts in the first quarter of this year in the UAE across developers and consultancies in Abu Dhabi and Dubai,” Gilmore told Gulf News.
“We will continue to see job cuts across the construction industry with firms that lack a proven track record and quality in the region, while well-known firms will continue to win mega tenders and hire cautiously.”
Gilmore noted that within the construction industry, companies “have become increasingly cautious” in recruiting new talent. Some developers now also prefer to hire UAE nationals, further limiting the opportunities for expatriates.
“The price of hiring the wrong person has become more pronounced. Established developers are doing their utmost to retain top talent within their organisation, however, some developers are once again becoming more Emiratisation focused.”
“Contractors do not have the luxury of retaining top talent as their reliance is on developers and the interiors market has been affected entirely while they are the last phase of construction chain. The market is investing in commercial teams and sales teams rather than operations teams, which tells us there is very little delivery in the current market.”
However, there are still employment opportunities and job postings have not posted significant declines. “There has been increased interest in [Ras Al Khaimah] with increased employment across construction and manufacturing. It’s not a complex market, projects are being constantly tendered for across the UAE and the established firms are suffering in these tenders and downsizing.”
Despite the “marked slowdown”, GulfTalent assured that the situation in the region remains “far more stable than in most other oil-dependent economies.”
Quoting the Economist Intelligence Unit, the report said that all GCC economies are forecast to achieve economic growth in 2016.
“This is in sharp contrast to Russia where the oil price collapse has already led to severe recession and a 50 per cent plunge in the value of the currency since 2014.”
Salaries across the region are still expected to rise, but at a slower pace, this year. Overall wages are forecast to increase by 5.2 per cent, down from 5.7 per cent in the previous year.
In Saudi Arabia, salaries could go up by 5.9 per cent, the highest in the region. UAE employees can expect pay adjustments of about 5.3 per cent, while Qatar workers will likely get 4.7 per cent increase. In Kuwait, Oman and Bahrain, salaries could rise by 4.6 per cent, 4.4 per cent and 3.7 per cent, respectively.
GulfTalent’s Employment and Salary Trends report is also based on 60 interviews with executives and human resources (HR) professionals between December 2015 and February 2016.