Blackstone Group-backed GEMS Education plans to freeze salary increases for teachers and cut corporate jobs following the Dubai government’s move to cap school fees, according to local media reports.
“The current move to hold salary increases is based on the recent school fee freeze decision,” a spokesperson for GEMS said in a statement.“This is not an unusual measure to take in uncertain times.”
The spokesperson added that “teachers within the GEMS Education network of schools are our most valuable resource and are at the core of our profession.”
"We have placed them at the centre of all our successes and in that context, we invested significantly in their salaries and benefits over the past five years," the spokesperson said.
During that time period, GEMS said that the cumulative salary increase was between 25 and 48 percent, and that it created 7,000 jobs.
Citing anonymous sources familiar with the matter, the National newspaper reported that GEMS would also cut jobs at its corporate headquarters.
The newspaper also reported that GEMS CEO Dino Varkey sent a letter to staff members saying the cap on tuition fees has had a “dramatic” impact on the education provider’s future plans and that the company has “significant financial commitments that must be maintained and serviced.”
Earlier in June, it was reported that GEMS is also planning to delay an initial public offering because of Dubai’s school fees decision.
According to Bloomberg, the company is currently studying the impact the decision will have on its earnings projections and may revisit the IPO later this year or consider selling a stake to a single buyer.
GEMS owners – which include Blackstone, Fajr Capital and Bahrain’s Mumtalakat Holding Co – had previously rebuffed a private equity company that had approached GEMS about buying a stake, instead opting for the IPO, Bloomberg reported.
GEMS owns and operates 47 schools in the UAE and elsewhere in the Gulf.
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