Dubai: Salaries for many UAE employees will most likely remain unchanged this year, as companies focus on cost savings to weather a “difficult year” ahead. Overall hiring activity will be slower and job cuts are likely to happen in some organisations, but employment opportunities still exist.
These are the forecasts shared by industry sources in the UAE based on a couple of studies that looked into compensation and hiring trends against the backdrop of falling oil prices, subdued economic growth and widening fiscal deficits in the region.
The Morgan McKinley 2016 UAE salary guide, released on Monday, highlighted that workers’ take-home pay will remain “broadly flat this year”, while the oil and gas recruitment market is set to have its most difficult year for more than a decade in 2016.
“Undoubtedly, the year ahead will be difficult for the UAE,” said Trefor Murphy, managing director at Morgan McKinley UAE. He noted that with the outlook for 2016 “highly uncertain, some doom and gloom is starting to creep into market sentiment.”
“We expect salaries to remain broadly flat during the coming year, with workers more concerned about remaining employed than pushing for substantial pay increases,” said Murphy.
Consumers in the UAE are becoming increasingly concerned about the state of the economy. In the latest survey by market research firm Nielsen, the majority of residents (53 per cent) said they believed that they were in recession. The number of people expressing recessionary sentiment represents 4.9 million of the country’s nearly 10 million population.
But there’s no need for residents to worry so much about economic or job prospects. Harish Bhatia, regional manager for services at Korn Ferry Hay Group, said that data from their annual business outlook study, published in February 2016, show that only 15 per cent of companies in the UAE are planning to implement some layoffs this year, but the majority don’t have any intention to reduce or expand their workforce.
More than 700 companies were polled for the Korn Ferry Hay Group’s 7th Annual Business Outlook Study and only around 105 organisations have said that they’re planning to make some staff redundant. More than half (54 per cent) indicated that they have no plans of either recruiting or retrenching some staff, while about a third (31 per cent) actually plan to hire new employees
“It has indeed been a challenging start to the year for businesses in the UAE and high-profile announcements can make it seem that all businesses are suffering,” Bhatia told Gulf News.
Bhatia admitted that hiring activity in the UAE this year is going to be “slower than 2014 and 2015”, but there is still some demand for skilled professionals, despite a section of the business community implementing some job cuts for cost savings.
“[The findings of our study show] that there are opportunities in the UAE. However, instead of existing in the traditionally strong sectors of oil and gas and finance services, they are more likely to be in other industries: fast-moving consumer goods (FMCG) and retail are two examples.”
“Organisations in UAE are more mature than they used to be and are reacting to this year’s slowdown with long-term sustainability in mind.”
In another survey conducted by Bayt.com, it was found that a significant number (39 per cent) of companies in the UAE are “definitely hiring” in the next three months, up from 36 per cent in the previous survey last year.
Suhail Masri, vice president of employer solutions at Bayt.com, said that while the recent decline in oil prices has “perhaps” dampened hiring activity in some sectors, postings on their portal have not registered a shock.
“Hiring levels in the UAE are consistent with hiring levels last year,” Masri told Gulf News. “Expo Dubai 2020 is one of the drivers, as it will lead to an increase in the number of building developments undertaken in the country in order to create the appropriate infrastructure, as well as create jobs in the tourism sector. This growth will certainly trickle down to other industries, too.”
Morgan McKinley’s 2016 salary guide also predicts that jobseekers will still find opportunities in FMCG and pharmaceuticals sectors. Those with experience in accounting and finance are most likely to get some job offers.
“Graduates with a finance-related degree continue to be particularly sought after by both local and international employers in the region. Senior risk and compliance officers, with several years’ experience, are also in high demand as banks look to comply with stringent rules set by regulators,” the report said.
While 2016 will be a difficult year for the UAE, Murphy added that the government is “making the right decisions to ensure that it balances its fiscal budgets and does not fall back into recession.”
As for salary increases, there might be a glimmer of hope later this year, but everything hinges on the oil price. “We are hopeful that salaries will increase above 2015 levels in the second half of 2016, but this will largely depend on what happens to oil prices as the year progresses,” added Murphy.