Dubai’s gold jewellery sector reinstating full salaries
Its workforce went in for paycuts from April, and this kept job losses to a minimum
Dubai: Dubai’s gold and jewellery sector succeeded in keeping job losses to a minimum in the months after COVID-19 struck, in large part helped by temporary salary reductions that the workforce agreed to.
And since January 1, full salaries are being reinstated at gold wholesalers and jewellery retailers, said the head of Dubai Gold & Jewellery Group. “There were two key considerations from the salary cuts that were brought in from April,” said Tawhid Abdullah. “First, we had to stabilise the cashflow of these businesses after the pandemic struck, and this had to be done in ways that inflicted the least pain on the employees.
“Right from the outset, in April, we were telling members of the Group not to sack people and don’t send people back home.”
Based on market feedback, there are more than 10,000 people associated with the local gold and jewellery trade, including those at bullion and jewellery manufacturing plants.
There were two key considerations from the salary cuts that were brought in from April. First, we had to stabilise the cashflow of these businesses after the pandemic struck, and this had to be done in ways that inflicted the leats pain on the employees.
Cuts provide solution
This was when a majority of the Group - there are more than 500 members - brought in staggered pay cut schemes. Those with entry-level salaries had to take in 15-20 per cent cuts, mid-level had to make do with a 25 per cent reduction in take-home, upper management level executives had 35 per cent cuts, and in the top echelons by 50 per cent.
“Those who were earning more had to put in a greater sacrifice - but it was done for the collective good, the industry’s future well-being,” said Abdullah, who’s also Chairman of Jawhara Jewellery. “From January and February, our members are going back to their full salary structures. We had the support of the HR Ministry and other entities such as Dubai Municipality in making these efforts work… and to keep down job losses to a minimum.”
Temporary work contracts were drawn up to cover the April-December period.
Much needed
Abdullah states that the COVID-19 offered lessons that the industry cannot shake off easily. One of these will be the need by retailers to reduce the number of stores within their networks.
“If they find there are stores that are not returning yields of 5-6 per cent, they are better off without them,” he added. “There are some corrections influenced by the pandemic that indeed healthy.
“In the past, adding stores and grab market share might have made perfect sense. Not now.”
Another ‘window’
After a torrid first quarter, gold sales in the UAE rebounded from the latter half of the third quarter and then building nicely towards higher sales in November and December. “I will even say that third-quarter 2020 was even better than the one we had in 2019,” he added.
On whether Saudi Arabia raising VAT to 15 per cent creates another opportunity for UAE retail, especially its gold category, Abdullah said: “Let’s say that it’s an additional window {of Saudi shoppers making use of the lower VAT here}. But Saudi Arabia has a lot of domestic gold and jewellery manufacturing, and they get exemptions.
“But yes, there will be some additional business from Saudi visitors to the UAE. But it will take time, say by the second quarter. We are still seeing only a small number of Gulf visitors because of the travel restrictions.”
But jewellery retailers did notice more tourist led buying in the final days of 2020 and in the first two weeks of this year. A lot of it are from Indian tourists, many flying in from states that do not require mandatory quarantining on their return.
First choice
The way Abdullah sees it, “Dubai will be the first choice to visit for everybody once travel restrictions are gone. The gold and jewellery group will be ready when they come.
“Sure, ongoing promotions are helping - but there still need to be buyers to make those promotions work. And there are buyers out there waiting to return... to Dubai.”