Thousands of layoffs expected at state-run organisations in Abu Dhabi

Author: PM editorial | Date: 01 Jun 2016

Expatriate staff will be hit hardest by the cuts as government limits unemployment among nationals

Thousands of layoffs are expected at state-run organisations in Abu Dhabi in a bid to cut costs and cope with a drop in oil revenue.

Among those are big regional employers such as Abu Dhabi's National Oil Company (ADNOC), which is feeling the pressure of low crude oil prices.

Expatriate staff will be hit hardest by the cuts at ADNOC and other state-run firms because the government wants to limit unemployment among its citizens.

“ADNOC must evolve into a more agile organisation to maintain its competitive edge in today’s global economy,” said His Excellency Dr Al Jaber in a statement. “This will ensure it remains a core contributor to the UAE’s progress, future development and longstanding efforts to diversify the economy.

“We have taken significant steps to ensure ADNOC enhances its commerciality by becoming more efficient and doing more with less, in line with best business practice,” he said. The reduction will occur across most of its 17 subsidiaries as part of a restructuring following a reshuffle of leadership.

Most Gulf countries have curbed spending on construction projects and reduced energy subsidies over the last year, and now they are looking to manage the wage budget at the organisations they control. But the job losses are contributing to a gloomy outlook from the International Monetary Fund, which predicts Abu Dhabi's gross domestic product (GDP) growth will fall to 1.7 per cent this year from 4.4 per cent in 2015.

ADNOC has reduced its workforce by a quarter since 2014. And earlier this year, Etihad Rail, the government-owned entity building a UAE rail network, said it cut almost a third of its staff in a restructuring.

It’s a problem by no means exclusive to Abu Dhabi, but prevalent across the Middle East. Low oil prices coupled with global economic uncertainty has damaged business confidence and hiring activity, said Ravi Singh, CEO of Bluefin Consultancy, a Dubai-based management consulting firm.