Dubai: A number of companies in the oil and gas industry in the UAE have shed some of its workers as they opt to reduce operational costs in the hopes of surviving the downturn, industry sources have confirmed.
The job cuts have affected employees with engineering background and those who worked on a contract basis. There is no specific data on how many businesses have trimmed down their workforce but concerns are high that there could be spillover effects into other sectors such as retail and hospitality.
A source also confirmed that banks are not hiring more than they used to and that they have now become more selective on recruitment. Jobseekers from abroad are also not finding it easy to find an employer in the UAE.
The sustained decline in oil prices has squeezed profit margins of oil and gas businesses not just in the region but around the world, forcing employers to reduce their staff size. As of March 18, companies in the industry, including oilfield services firms, parts manufacturers and steel pipe makers, have shed at least 75,000 people worldwide, according to Forbes data.
In a survey released in June, it was also found that the majority of companies in the sector are not keen on hiring additional staff. More than half (51 per cent) of the global oil and gas hiring managers said they have decreased their hiring efforts in the past three months, with an additional 13 per cent saying they have frozen their recruitment plans completely, according to Rigzone, a global online resource for the industry.
“Despite some early positive signs in market trends, the oil and gas market continues to experience volatility and, as a result, companies remain reluctant to expand their hiring plans,” said Bob Melk, president of Rigzone. “For many companies, potential hiring opportunities have been postponed for the foreseeable future.”
Rajiv Ramanathan, associate partner for human resources consulting firm Aon Hewitt, said that as a result of the downtrend, they “have seen some job cuts in the oil and gas industry” in the UAE, “especially with engineering and contracting staff whose contracts have not been renewed.”
“I think at present there is more impact from economic conditions on the direct primary service industries attached to oil and gas and construction,” Ramanathan told Gulf News. “There could be a spillover effect on other industries, but it’s tough to make that assessment right now.”
Nielsen’s latest survey showed that consumer confidence in the UAE dropped by several points in the second quarter compared to the previous, with many residents in the country now concerned of losing their jobs as a result of oil price decline and slowdown in real estate and tourism sectors.
“Job security concerns [in the UAE] are amplifying as lower oil prices can fuel expectations of government spending cuts,” said Arslan Ashraf, managing director, Nielsen Arabian Peninsula.
Ramanathan said it would be “unfair to say people should be concerned about job security”.
“An external perspective to consider is the decline in the euro and Russian rouble compared to the US dollar, against which the UAE dirham is pegged. In the short term, there may be a slight impact on the tourist influx into UAE, potentially leading to a temporary slowing of recruitment activities in allied sectors such as hospitality and retail. However, it may be too preemptive to suggest any job cuts.”
“In the banking sector, however, recruitment activity has slowed down and banks are becoming more selective on hiring the right talent. We are also seeing that talent from abroad are struggling to find jobs in the UAE without any relevant local work experience,” Ramanathan added.
According to Suhail Masri, vice president of sales, Bayt.com, recruitment activity in the UAE will pick up as Expo 2020 draws near and more development projects will be launched in the country.
The majority of the UAE employers surveyed by the company (71 per cent) also said that they will be hiring in a year’s time. Bayt.com alone has more than 3,500 positions advertised daily for those looking for new jobs in the country.