Dubai: With nearly half of the population in the UAE currently facing a pay cut and most of them foreseeing the reductions to continue for the next six months, is it time to find another job or take on a new skill?
In the UAE, 76 per cent of 25 to 34-year olds would set up a second income stream. Moreover, 77 per cent of all 18 to 44-year olds would reskill compared to only 56 per cent of those aged 55 and over.
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This observation was drawn based on a broader Standard Chartered survey done among 12,000 adults across twelve markets – Hong Kong, Taiwan, Mainland China, Singapore, Indonesia, Malaysia, India, UAE, Kenya, Pakistan, the UK and the US.
COVID-19 hurts personal finances
The survey found that COVID-19 is significantly impacting personal finances, with 50 per cent of the UAE population - which is estimated at 9.9 million - currently earning lesser than normal, and 60 per cent of that expecting the pandemic to further cut their income and/or employment pay in the next six months, based on the study.
This finding was echoed in one-third of the global population, the report revealed, while also adding that young people aged between 18 and 34 in the UAE and those in emerging and fast-growing markets are the most confident in their skills and are prepared to work hardest to realise opportunities in a post-COVID world.
Confidence contrasts with financial reality
“It reveals a stark contrast between the financial reality that people face and their confidence in the future,” the Standard Chartered study report notes. “This can be explained by a willingness - particularly among young people and those in fast-growth and emerging markets - to work harder, take steps to adapt income streams and reskill if they can, in order to earn more.”
Young people are particularly confident, with 87 per cent of 18 to 34-year olds in the UAE feeling that they have the digital skills needed to thrive post-COVID-19 compared to 71 per cent of those over 65 years.
“And, with many graduating or leaving school in the midst of a global recession, younger generations are also more willing, or able, to adapt to the current circumstances,” the survey further notes.
So is it time to find a new job?
However, the question remains is it time to quit your current job, find a part-time job or take on additional skills during this time of the current pandemic crisis.
The opportunity to make more money and lead a better lifestyle has already been driving some UAE residents earlier to take up part-time work without leaving their full-time jobs. Others have been undertaking part-time gigs to pursue a hobby or passion as well as to save extra cash for children’s education or retirement.
However, with the latest round of pay cuts, and signs indicating of further extensions, the situation only drive those earlier on the fence about finding an alternate means of income, to now being compelled and finally resort to taking on additional ways to earn more money.
Buying power high among UAE residents
With the UAE’s inflation declining by 1.6 per cent year on year during the fourth quarter of 2019 (as per Central Bank data), evidently UAE residents have had more purchasing power today. However, this was in stark contrast to 2015 and 2016 where the high cost of living forced several expatriates, especially Generation Z, to work part time to supplement their income.
Used to having some extra cash in their pockets over and above their regular salaries, they continue to pursue part-time assignments today to lead a better quality of life, fund their travel expenses and miscellaneous entertainment charges.
Although Dubai and Abu Dhabi were named the most expensive cities for expatriates to live in the GCC, according to Mercer’s 2019 Cost of Living survey, the actual cost of living - or inflation – in these cities declined in 2019 owing to lower housing rents and dropping fuel prices. Mercer statistics cite a 2.09 per cent deflation between April 2018 and 2019.
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School fees, housing rents bite
Moreover, the majority of Dubai’s private schools were only allowed to raise fees by 2 per cent in the 2019-2020 academic year. However, most schools opted to freeze fees or offer discounts to make it affordable for parents. Schools in Abu Dhabi, too, only increased fees marginally.
Although many schools offered temporary fee-relief to parents at the end of the 2019-2020 academic year due to the shift to distance learning part-way through, the fact that many schools have gone back this week for the 2020-2021 school year either partly or fully online should have no impact on the tuition fees.
Housing rents, which take a big chunk out of expats’ monthly earnings, have also reported a decline in the UAE. Average apartment rents in Dubai dropped by 13.4 per cent year-on-year in the last quarter of 2019, while villas/townhouses registered a 9 per cent fall, according to property consultancy Cavendish Maxwell.
Need for extra money rises with pay cuts
Even as the cost of living has comparatively reduced in the UAE, with salaries cut lower, big spenders are resorting to doing part-time work to continue to fund their lifestyles. Employers are also increasingly hiring more part-time workers and less full-time staffers to optimally manage their operational expenses.
Wages in the UAE have been staying stagnant for quite a while now and with the current pay cuts, a majority of people struggle to meet all their household expenses and they are running out of spare cash.
Up to 40 per cent of employees across the UAE have not had a salary increase for two years, disclosed a study by Tiger Recruitment in December 2019. The research also found that 71 per cent of survey respondents have not been rewarded a bonus in the last 12 months.
Pay cuts compound problem of stagnant wages
This is understandably why some residents are opting to take up part-time work to supplement their income. Officially, you can do other work if you have a no-objection letter from your company. You will also need a work permit from the Ministry of Human Resources and Emiratisation for the intended part-time work.
The government had introduced e-commerce and freelancer visas to regulate online stores, influencers and part-time workers. However, costing a minimum of around Dh6,000, they are still not cheap.
Experts suggest that if you have useful skills from your career, you can apply that to other areas. For example, teachers can tutor in the evenings. Or if you have a passion outside work, you can use it to set up an online store, create an online course or teach people in person.
You may find that ultimately this takes over as your main source of income. However, it is often warned that if you do so, be careful not to let your actual job suffer, while abiding by the current pandemic-related social-distancing norms.