Archive for February, 2009

UAE Job Meltdown

UAE – 2000 EMPLOYMENT VISAS CANCELLED DAILY

Uncertainty among Indian expats in the UAE is reaching maddening heights as jobs vanish by the day. An average of 1,500 to 2,000 visas are cancelled in the white collar sector every day, according to an analyst with a leading Dubai firm.

Schools are flooded with applications for transfer certificate as families get ready to return home. There would be an exodus to India by March.

Though there are only a total of 3,200 declared job losses by seven companies in Dubai, estimates from market sources put this at 20,000.

Unofficial figures hint at 30,000 white collar jobs lost in the past three months. This is in addition to the tens of thousands of labourers rendered jobless every week.

Sudhir Kumar Azhakath, Partner & Head of Corporate Communications and Public Relations, Morison Menon Chartered Accountants, a leading audit firm in the West Asia, told Express that companies were re-evaluating strategies and restructuring resources to cope up with the global and local challenges.

Most of the companies have stopped giving pink slip figures as it might land them in trouble with the Ministry of Labour.

Emirates NBD (merged entity of Emirates Bank International and National Bank of Dubai) had fired 1,800 employees.

Another 1,700 pink slips are in the pipeline.

This means 32 percent of a total workforce of 11,000 would be jobless in what the company terms ‘shedding of extra fat.’ Standard Chartered had cut 500, HSBC 250 and ADCB 750.

One major Indian school has a got transfer certificate applications for 900 students till last week, which is 10 percent of the school’s student population.

There are more than 10 major Indian schools in Dubai alone.

This is due to various reasons including job loss, high cost of living and tuition fees and high rentals.

The proposal to raise the minimum salary to 10,000 Dirhams for family visa status would make it impossible for a large chunk of expatriates to retain their families in the UAE. A recommendation to this effect has already gone from the Federal National Council to the Federal Government.

Sudhir Kumar warned that by March/April there will be a huge flow of Indian expatriates. “Out of this 70 percent will be Keralites going back for good or deciding to stay alone and send their families for good.

And there are a lot of other expatriates who will also be moving out – Pakistani, Egyptian, Sri Lankan, UK, Germany etc. Recently 70 UK expatriates left their luxury cars in the airport and left the country. And more than 100 expatriates from India and other countries left similarly.

It is officially estimated that Dubai’s 2008 population of 1.3 million will come down by 8 percent this year. But according to me it will go down by more than 25 percent.”

 

expats beware

Private companies must henceforth recruit UAE nationals as human resources managers and secretaries, the labour minister said on Saturday.

“This will create 21,536 jobs including 671 managers,” said Dr Ali Bin Abdullah Al Ka’abi.

Private businesses are being given 18 months to replace their existing human resources and personnel managers with UAE nationals, while no more work permits for secretaries will be issued with immediate effect, according to two decisions signed by Al Ka’abi on Saturday.

The minister said foreign secretaries who hold valid labour cards and are recruited by virtue of job contracts will remain in their jobs until the end of their limited-period contracts or otherwise until the end of the labour cards, “whichever is earlier”.

This, Dr Al Ka’abi said, implies that neither the job contracts nor the labour cards of secretaries will be renewed.

“Furthermore, private companies will not be allowed to transfer sponsorship of secretaries and they will not be issued temporary or part-time work permits or mission permits. Secretaries sponsored by their husbands or parents will no longer be issued labour cards,” he said.

“The labour ministry’s new emiratisation plan is meant to strengthen the recruitment of UAE nationals in certain jobs rather than in economic sectors after it [the ministry] found a lack of commitment to the emiratisation quota imposed by the Cabinet in the banking, insurance and trade companies.”

Companies which wish to recruit UAE national secretaries should coordinate with Tanmia, the National Human Resources Development and Employment Authority and other human resource development programmes in Abu Dhabi, Dubai and Sharjah.

Emiratisation, he said, will now be on the basis of profession, a policy that has succeeded in private companies with 100 workers or more, which recruit UAE nationals as government relations officers, also known as PROs.

The new decisions are applicable to all private companies, regardless of the number of their workers.

Dr Al Ka’abi said the emiratisation of human resource managers was prompted by foreign human resources managers’ “preference to recruit their own nationals.”

Calling the 18 months a suitable grace period, Dr Al Ka’abi said Tanmia will provide training to UAE citizens to be recruited in place of foreign human managers.

JOB Insecurity

Proposal moots job security for Emiratis

Dubai: A proposal to ban companies in the private sector from sacking Emiratis other than for labour law violations is under consideration.

The National Human Resource Development and Employment Authority (Tanmia) has submitted a draft proposal to the Ministry of Labour under which cases pertaining to the termination of Emiratis working in the private sector are to be evaluated.

Feddah Lootah, the acting director-general at Tanmia, said the proposal aims to safeguard jobs of Emiratis in the private sector. “The main task of the authority is to preserve the jobs of Emiratis,” he said.

The ministry is looking into the proposal but no time-frame has been given as to when a decision could be made.

The proposal suggests that the termination of Emiratis in private sector companies is to be considered arbitrary unless the employee has violated the labour law.

The violations which could lead to a worker’s peremptory dismissal are outlined in Article 120 in the Labour Law.

Article 120 clearly mentions ten cases in which the employer is entitled to terminate a worker’s contract. Non-performance of basic duties as set out under the contract and repeated violations despite warnings, professional mistakes which result in a substantial material loss to the employer, and clear disregard for safety instructions at the workplace are some of the clauses that can be brought against erring employees.

Last week, Gulf News reported that a group of Emiratis had filed a complaint against Al Futtaim Group for what they said was arbitrary termination. The case is still under review at the ministry after the sacked employees had sought immediate reinstatement.

The Tanmia proposal also stipulates that any company in the private sector forced to terminate Emiratis as part of restructuring policies aimed at increasing competitiveness, review of production costs in tough times, or in cases involving mergers between companies should duly inform the ministry of labour about such a move before any decision.

Also, as per the proposal, no company will be allowed to sack an Emirati before it has exhausted all avenues to find a suitable solution.

The proposal outlines a number of steps that a company should mandatorily satisfy before terminating Emiratis such as implementing a part-time system, repackaging salaries on the condition that they don’t go below the minimum wage for Emiratis (which is between Dh3,000-Dh5,000 – depending on the qualifications), relocating them within the company or training them to handle other positions in the company.

Additionally, an employer in the private sector will also not be allowed to terminate an Emirati on the pretext that he/she does not have the required qualifications and skills, if the employee has completed her/his probation period.

New clause

The National Human Resource Development and Employment Authority (Tanmia) is in talks with the General Pensions and Social Security Authority to add an article in the social security to protect Emiratis that are made redundant.

Feddah Lootah, Acting Director-General at Tanmia, said that they are in talks with the Pensions authority to include a clause in the social insurance law, which stipulates unemployment insurance in the law.

Insurance

The National Human Resource Development and Employment Authority (Tanmia) is in talks with the General Pensions and Social Security Authority to add an Article in the social security scheme to support Emiratis who are made redundant.

Feddah Lootah, acting director-general at Tanmia, said the authority was in talks with the Pensions Authority to include a clause in the social insurance law, which stipulates unemployment insurance.

JOB CUTS in DUBAI

In UAE employers make cuts as downturn deepens.

An increasing number of companies in Dubai are announcing layoffs and adjusting their hiring and pay practices as the impact of financial crisis grows in the emirate.

Dubai’s booming economy has, in recent years, created millions of jobs and led to a hiring frenzy in which many employers were struggling to find talent.

In the first quarter of 2008, 306,000 work permits were issued to foreigners.

However, the story began to change in October, when Damac Properties cut 200 jobs, or 2.5% of its workforce.

Other companies quickly followed suit, including Nakheel, which sacked 500 employees, and Shuaa Capital, which cut 21 jobs, or 9% of its manpower.

‘The effects of the global financial crisis were delayed in reaching Dubai but there is no denying they are being felt today,’ says Rabea Ataya, CEO, Bayt.com, the largest job site in the Middle East.

‘The dramatic surge in recruitment activity seen early in 2008 as new sectors, particularly financial services and real estate, competed for top talent to fuel their growth, has abated significantly.’

‘Isolated problem’
Markus Wiesner, Managing director of Mercer Middle East, agrees that the financial crisis has hit certain sectors very hard, but says the problem has been relatively isolated and overall most companies are handling it by recruiting fewer employees or being more conservative on salary increases.

‘In Dubai, we are seeing a moderate slowdown in the growth curve rather than a complete stop or recession as in other countries. We are starting from a very high and aggressive growth level, so while yes, there has been a slowdown, this economy is not in a recession but has settled into a more moderate, or maybe a better word is more reasonable, growth rate right now.’

As the financial crisis has grown Bayt.com has received a dramatic increase in CVs at all career levels. The company has over two million CVs in its database, the bulk of which come from the GCC, Levant and North Africa.

About 20% are from outside the region, with the most noticeable spikes having been in CVs from the US and UK – particularly in the financial services and real estate sectors and amongst fresh graduates, especially MBAs.

In addition to an increase in quantity, there has been a noticeable increase in the quality of CVs, especially from overseas, as hiring activity in world capitals has shrunk.

Moreover, top talent has become more mobile in their job search and more amenable to considering employment opportunities in the GCC, which was already seeing a significant surge in interest from overseas talent even before the financial crisis, Ataya said.

Not surprisingly job listings have dropped noticeably on Bayt, but a main reason for this, Ataya says, is that employers are increasingly using the site’s search functionality to find talent rather than posting an advertisement for a position, which is a trend the company began to witness even before the financial crisis arose.

Companies prune workforce
With a surplus of talent on the market, many employers are ‘upgrading’ and hiring talent at levels they were previously unable to easily find and/or afford in the local markets, Ataya noted.

Wiesner agrees, saying companies have told him they hired many people over the last couple of years ‘just for the sake of recruiting to fill positions’, but in doing so felt they had to compromise on the quality of people they hired. Now these organisations are looking at the downturn as an opportunity to trim staff that may be underperforming, and keep those people that they want to hold on to in the long run, he said.

Companies will differ in their approach to dealing with the financial crisis. Multinational firms in Dubai are unlikely to change their benefit plans because – even though these packages are adjusted to the local market – the plans are relatively standard across the company’s worldwide locations. Instead, these companies are more likely to cut salaries and bonuses.

‘Local companies, on the other hand, might adjust both pay and benefits, but usually the first to go is bonuses, and then – in this region – they are more likely to freeze, rather than cut back, on salaries,’ Wiesner said.

Wait-and-see approach
Many companies say they are still evaluating the situation.

‘A lot of our clients are taking a wait a see and approach. They tell us they see no immediate need to lay off people or cut salaries, but the situation may look different a year from now. We will see over the next 6-12 months the real effect of the downturn, particularly on Dubai and its economy.’

One fact of life that employees should expect is that salaries will remain relatively flat for the time being. ‘Recently we had high inflation – up to 14% – and pay increases that were close to that figure but not 100% keeping up.

‘So what I expect this year is lower inflation and lower pay increases justified by the global financial situation. Again we will hear similar complaints from employees this year because of the situation in terms of the percentage growth versus inflation is similar to what it was last year,’ Wiesner said.

Another trend that employees are likely to see is more pay packages based on performance. ‘We have quite a lot of organisations coming to us looking at more performance-related payment schemes, but I would not say that this is particularly driven by the current economic situation.

‘This is a general cultural change that has been happening here over the past two to three years, where organisations are looking for payment structures with higher bonuses relative to salaries. I think organizations now have a stronger incentive to go down that route,’ he noted.

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