Dubai: Companies in the UAE are now cautious about hiring new staff and could further streamline their payroll to cope with the slowdown brought about by falling oil prices, industry sources said.
Job cuts aren’t just confined in the oil and gas or finance industry, but could also affect other sectors and impact redundant or unproductive positions. At least three UAE banks announced recently that they had slashed about 350 jobs.
Rajiv Ramanathan, an expert in workforce planning who works as an associate partner at Aon Hewitt Middle East, said that employers are now taking a “conservative approach” to hiring and are planning strategically before taking any “headcount reduction exercise.”
“Almost all government and private sector organisations are approaching this situation cautiously. However, headcount reductions are likely to be more visible in the non-productive jobs, compared to productive, revenue-generating positions,” said Rajiv Ramanathan, an expert in workforce planning who works as an associate partner at Aon Hewitt Middle East.
“Cautious is the word of the year. Companies in the UAE are cautious in managing budgets and maintaining a profitable operation. Because of global ramifications, the low oil price and the softening of the real estate market, hiring in the country is slowing down,” added Sanjay Modi, managing director at Monster.com.
Modi said they have been seeing a "steady decline" in hiring activity in the oil and gas sector, which posted a negative 20 per cent growth in job demand in October.
The two other "worst performing sectors" are banking and financial services, where job hiring grew a modest 3 per cent, and the advertising/market research/public relations/media and entertainment industry, posting only a 3 per cent growth in recruitment.
"During an economic slowdown, the creative sector usually exhibits the lowest appetite for hiring and companies freeze advertising budgets, re-directing cash to critical business operations," Modi told Gulf News.
Just last month, First Gulf Bank had cut about 100 positions, while Standard Chartered and HSBC reduced their workforce by 100 and 150, respectively. The job cuts were announced just after most of the country’s banks reported their balance sheets for the third quarter of the year, which showed slowdown in deposits and decline in credit/asset mix.
Should you worry?
Will there be more job cuts in the banking sector? An economist said there is “little” to worry about as far as the big homegrown brands are concerned, but it is good to keep an eye out for smaller players in the industry.
“The UAE banking sector is dominated by four local banks and their balance sheets have stable indicators with little cause for concern. On the other side, smaller banks’ results indicate weak asset quality and declining profits,” Alp Eke, senior economist at National Bank of Abu Dhabi, told Gulf News.
Eke said the oil price decline has put pressure on government spending plans in the Gulf Cooperation Council region . “The UAE government has been pro-active and adjusted spending patterns relatively quickly in comparison to other GCC nations. However, in 2015, assuming the oil price average is at $55, the oil sector is predicted to contribute 50 per cent of government revenues for UAE.”
“Therefore, the government is under pressure and not able to meet spending plans. Due to reduced revenues, government deposits are declining which seems to be the main reason for tightening liquidity.”
Analysts have said that the oil decline could get deeper, with the price forecast to fall to $38 per barrel next week.
On the bright side
But it doesn’t mean companies are no longer hiring. Recruitment experts said that certain industries are still looking to hire new employees. The healthcare industry, for example, is worth looking into, as positions in clinical and clinical support roles are likely to see a growth in the coming years, according to Ramanathan.
“The healthcare sector is definitely on the rise. With a large public and private sector collaboration in place, one can expect a surge in demand,” he said.
UAE’s Minister of Economy Sultan Bin Saeed Al Mansouri said on Saturday that the country is in a strong position to weather the fall in oil prices, adding that the ongoing development plans and projects remain unaffected.
He said that the UAE economy, which is growing at a rate of three per cent according to a recent International Monetary Fund report, is the second-largest in the Arab world.
“The national economy has grown exponentially over the past few years of our country’s small age. We’ve made great achievements that were in parallel with the overall development of the country. Today, our national economy continues to see a balanced growth, enhancing competitiveness and overcoming obstacles such as the drop in oil prices. The economy is today driven by its own factors, while its productivity foundation is stronger, resilient and diversified.”