Cheap oil to temper GCC hiring appetite
Author: Criselda Diala-McBride | Date: 22 Dec 2015
Outlook appears bleak for the regional job market as low crude prices bite into the economy
Human resources consultants are expecting hiring activity across the GCC region to remain subdued next year, as falling oil prices contribute to a growing liquidity squeeze in various industries.
Governments in the oil-exporting region have seen their revenues dwindle since 2014, with benchmark Brent crude trading at around US$36 per barrel in December 2015 – the lowest level it has reached since the global financial crisis in 2008.
Declining oil prices have also prompted the International Monetary Fund (IMF) to record a lacklustre outlook for the regional economy. Export revenues, according to the international lender, will be US$275 billion lower in 2015 from the year before, while GDP growth is projected at just 3.25 per cent this year and 2.75 per cent in 2016. It also warned that oil prices “could remain low for years”.
Ghassan Turqieh, consulting partner at Deloitte Middle East, said the economic slowdown will have a noticeable impact in the hiring activity across GCC countries in general; and the UAE, Qatar and Bahrain in particular.
“Governments in those countries need to continue creating job opportunities for nationals who face unemployment, especially among youth, [as part of their] nationalisation agendas,” he said. “At the same time, budget constraints [will] force governments to optimise their hiring efforts, [eventually] finding themselves unable to further absorb unemployment.”
The solution, Turqieh believes, is the strengthening of partnership between the private and the public sectors so nationals can be redirected to private sector employers.
“As for private sector companies, they are increasingly freezing recruitment efforts and engaging in rightsizing exercises – this has been noticed in the financial services sector and we expect other sectors to follow,” he said.
Gareth El Mettouri, associate director of Robert Half UAE, said retaining top talent during a challenging economic climate would be a major concern for organisations in the GCC.
“The shortage of skilled professionals is expected to continue into 2016. Additionally, companies are now less inclined to offer relocation incentives, creating a real concern [in] attracting key professionals,” he said.
The shift in paradigm, however, is driving demand for HR professionals, especially learning and development managers who are able to implement training and development opportunities to help retain existing staff and keep them from looking to move jobs, said El Mettouri.
“In order to remain competitive, businesses will need to ensure they are able to retain their top performing employees and attract the professionals they need,” he added.
While sectors such as oil and gas will undoubtedly have a more downbeat approach to hiring in 2016, Robert Half UAE’s El Mettouri said preparations ahead of the Expo 2020 in Dubai may provide some impetus to the job market in the UAE.
“Sectors continuing to prepare for growth and hiring to reflect this includes construction, banking, financial services, insurance, information technology and telecommunication. Roles in financial services and human resources are where demand is expected to outstrip supply next year, according to the Robert Half 2016 Salary Guide,” he said.
Meanwhile, Turqieh of Deloitte said no industry will be immune from the hiring slowdown, which started with oil companies and government organisations. However, he believes that healthcare and education will continue to hire despite the macro-economic challenges, as governments continue to invest in these sectors.
Turqieh also underscored some factors that will shape the job market outlook for the UAE, Qatar and Bahrain in 2016.
UAE: In general, hiring seems set to stagnate or decrease yet there are sectors that continue to hire – particularly healthcare. Other than the IMF statistics and the region’s fiscal conditions, the UAE is characterised by: 1) Visa restrictions from candidates coming from war-torn countries, making it difficult to source talent from those nations; 2) Enhanced benefits in general as new health insurance laws were implemented in both Dubai and Abu Dhabi; 3) Increased cost of living due to higher housing costs have put pressure on employers to be able to attract and retain talent.
Qatar: While hiring continues to stagnate or decrease, the construction sector continues to expand, with several infrastructure projects starting ahead of the FIFA World Cup 2022. Qatar is becoming increasingly more attractive with the improved employment practices as the media has shed light on employee rights and the wage protection system.
Bahrain: The nationalisation agenda has been very stringent, and employers who fail to comply are fined. On the other hand, Bahraini nationals in the private sector benefit from a minimum wage subsidised by the government, which is expected to further enforce the recruitment of Bahrain nationals.