Residents worried about layoffs and salary freezes, as UAE companies face a difficult year ahead

Salaries for many UAE employees will most likely remain unchanged this year, as companies focus on savings to weather a “difficult year” ahead.

Overall hiring activity will be slower and job cuts are likely to happen in some organisations, but employment opportunities still exist, Gulf News has reported based on a couple of recent studies.

The studies were focused on compensation and hiring trends against the backdrop of falling oil prices, subdued economic growth and widening fiscal deficits in the region.

A difficult year ahead

The Morgan McKinley 2016 UAE salary guide, released on Monday, highlighted that workers’ take-home pay will remain “broadly flat this year”, while the oil and gas recruitment market is set to have its most difficult year for more than a decade in 2016.

“Undoubtedly, the year ahead will be difficult for the UAE,” said Trefor Murphy, managing director at Morgan McKinley UAE. He noted that with the outlook for 2016 “highly uncertain, some doom and gloom is starting to creep into market sentiment.”

Consumers worried about economy

Consumers in the UAE are becoming increasingly concerned about the state of the economy. In the latest survey by market research firm Nielsen, the majority of residents (53 per cent) said they believed that they were in recession.

  • The number of people expressing recessionary sentiment represents 4.9 million of the country’s nearly 10 million population.

But there’s no need for residents to worry so much about economic or job prospects.

Only 15% companies planning layoffs

Harish Bhatia, regional manager for services at Korn Ferry Hay Group, said that data from their annual business outlook study, published in February 2016, show that only 15 per cent of companies in the UAE are planning to implement some layoffs this year, but the majority don’t have any intention to reduce or expand their workforce.

More than 700 companies were polled for the Korn Ferry Hay Group’s 7th Annual Business Outlook Study and only around 105 organisations have said that they’re planning to make some staff redundant.

More than half (54 per cent) indicated that they have no plans of either recruiting or retrenching some staff, while about a third (31 per cent) actually plan to hire new employees.

Hiring to be slower

“Hiring activity in the UAE this year is going to be slower than 2014 and 2015, but there is still some demand for skilled professionals, despite a section of the business community implementing some job cuts for cost savings,” Bhatia says.

In another survey conducted by, it was found that a significant number (39 per cent) of companies in the UAE are “definitely hiring” in the next three months, up from 36 per cent in the previous survey last year.

Morgan McKinley’s 2016 salary guide also predicts that jobseekers will still find opportunities in FMCG and pharmaceuticals sectors. Those with experience in accounting and finance are most likely to get some job offers.

While 2016 will be a difficult year for the UAE, Murphy added that the government is “making the right decisions to ensure that it balances its fiscal budgets and does not fall back into recession.”

As for salary increases, there might be a glimmer of hope later this year, but everything hinges on the oil price.

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