How many more jobs to go in the UAE?

Dubai Government developer Nakheel has just announced 400 more staff redundancies on top of the 500 cut last December, the latest round of job losses in the UAE where one-out-of-10 people have become redundant in the past six months, according to a poll conducted by YouGov for Abu Dhabi Government’s The National newspaper.

Because the law requires non-GCC residents to leave the country within 30 days of losing their job, the true tally of recession job casualties is certainly higher, and Dubai is the epicenter of redundancies, with construction and real estate worst hit.

Job insecurity

Not surprisingly two thirds of the 821 people surveyed by YouGov were worried about their future job security while 59 per cent said their salaries had been frozen in the past six months.

The big question among expatriates is whether downsizing is now coming to an end. For the immediate few months it almost certainly has because firms will have been keen to dismiss workers before the summer lull rather than wait.

Prospects for employment in the autumn do not look that much better with most employers waiting to see a recovery rather than anticipate it. Recent oil price declines do not bode well for the autumn months and stock market falls are predicting a weak period.

However, the jury is still out on further rounds of redundancies. If companies find that the local economy is still weak as the year-end approaches then they will have no alternative but to make deeper cuts, and indeed they will regret not having done them sooner.

Falling population

But for the UAE with its 80 per cent expatriate population this rationalization of the workforce comes at the price of a falling population which only exacerbates the downward pressure on the local economy with falling demand for property, goods and services. On the other hand, the social costs associated with unemployment are avoided.

It would therefore still be prudent for the governments to invest in infrastructure development at this time to ensure that the local economy continues to function, and incidentally with construction costs on the floor, this is also a great time to invest for the long term.

Then again whether this public sector investment will be sufficient to offset the malaise in the private sector is another issue, and it may not come fast enough to secure all jobs for 2010.

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