By Rebecca Bundhun
Rising job cuts will prompt an exodus of workers, posing a serious risk to the country's economy.
The biggest risk facing the UAE economy is a potential reversal in population flows as the job market comes under pressure, Standard Chartered warned on Wednesday.
Rising job losses would inevitably force a number of workers to leave the country, given that the majority of the UAE labour force is made up of foreign nationals.
UAE law states that foreign national residents who lose their jobs can only stay in the country for one month.
“There is no official data on the current status of the labour market, but there are signs that the UAE is shedding jobs,” said Mary Nicola, senior economist at Standard Chartered.
Indeed, UAE developer Nakheel last month axed 500 jobs, and is among a number of companies that have been forced to make redundancies due to the recent slump in real estate and construction industries.
“While construction and real estate are the worst-affected sectors, job losses now seem to be spreading to other sectors,” Nicola said.
Reports suggest that visa cancellations in Dubai have accelerated since October 2008, and are now averaging 1,500 a day and exceeding 2,000 on some days, Nicola added.
The expat population grew nearly seven percent in 2007, with expatriates totaling 3.62 million, against only 864,000 nationals, according to data from the Ministry of Economy.
“How these demographic factors play out will have serious consequences for the economy,” Nicola warned.
No way are there going to be 'serious consequences', Nicola. (dont be so honest) Didnt you read about the decision yesterday and how it was aptly supported by newspapers today claiming only some people have been affected.
This is all too obvious.
Every newspaper/magazine in the country is talking only about job cuts at Nakheel and Emaar and the likes. For those who seem to not know the complete picture, even large companies have started slashing jobs. WS Atkins trenched 215 people last week, Halcrow supposedly sacked about 60 and employees - like me - working in many other large engineering companies which are as much involved in the construction sector are bracing themselves for the worst. And these are all just the white collar jobs that I am talking about.
The project based jobs will see the greatest corrections as will the jobs in industries directly affected such as hotels , travel & tourism. Of course others that service the employees in this industries will see a ripple but this should affect smaller numbers which were built up specifically for these segments.
Yes Job cuts are on rise in UAE. Surpurisingly, we have not seen any hard and concrete Economic Revival Package from UAE as we have seen in major economies like US, UK, India, Japan, China all working out economic revival package, but nothing much heard from UAE or others in the region, expect for bank rate cuts We are seeing, DRDN offical saying on an average of 1500 people leaving the country per day due to job loss, and we have Govt adviser saying that Buisness is growing. A realty check on Dubai secanario - just a trip across Dubai, one can see cranes not working, workers are not on site, traffic much reduced, malls are empty, restaurants not crowded, shops on street fewer customers, thin crowds at supermarket, taxis available in plenty, heavy cancelleation at DRDN, hotels have poor occupancy, cars left at airport or parking lot, persistant calls from banks, friends and colleagues being laid off, Transfer certifcates at schools high etc. What does the above signs say- a grim picture of UAE Will UAE govt step in boost economy, to quote new US president - 'The economy should not be ruined by few greedy people'
Farhan, have you looked round dubai recently, the shops, the bars, the streets, the traffic, are all far less now than 2 months ago. Companies a laying off far more than reported, believe me. I know of one company laying off 3,000 last week. It will effect us all.
The press across the board in UAE is a big farce. They are almost equivalent to a useless memo posting exercise with no intelligent investigation, follow-up and attempt to come across with the facts or even closest to them. One morning, the economy is doing well, because an official from the government has been quoted in the articles. The second day the economy is under threat because some private sector bankâ€™s opinion is the basis. So what is the real picture and state of Dubai? The papers report through an opinion from the advisory council ...that more companies are being registered, more visas are being issued more people are coming in. However, all around people are losing their jobs...some 2000 cars having being left at the airport. Undisclosed sources say that large number of visas are being cancelled, followed by the next day quotes by the immigration officially stating that infact the number of visas issued are much more. More people are coming in. How they are coming in is anyone's wonder because most flights show plenty availability when it should be peak traffic of the DSF in Dubai. Further, they must be coming into Dubai and hiding away in the low cost or discounted low occupancy hotels, because you can sense a thinning out of traffic on the streets and less number of shoppers in the mall rather a surge. If you walk past the stores in malls you can see the eager staff on the doorway of their shops hoping to grab the shoppers just passing by. They must be wondering why the 50pct - 75 pct discounts are not working in this strong economy. The official sources however are expecting revenueâ€™s just a shy short of last years figures even though globally companies are seeing significant revenue losses from their last years figures. Surprisingly, the opinion from the official sources say that infact the reasons why they are less cars on the roads is because ...people have started using the bus. It just gets more hilarious. Infact, some have sold their second cars and are sharing cars. I wonder whom they have sold these second cars too, because it doesn't seem anyone is buying. This is quite evident through the desperate ads by car companies posting a barrier free access on finances. Most banks have raised their bar on car loan requirements, so not sure who is investing in buying off these second spare cars from cash strapped sellers. Must be a new enterprise. Regardless of the facts and perceptions of the people around and conflicting economy reports the government still thinks people have plenty spare cash and are being paid well enough to spare a large chunk towards the expected rent rise that will hit them shortly. The government order on the rent freeze with a cruel twist of getting lower rents at par with the inflated prices of last year is the final nail in the coffin. What a badly timed correction of the lower level rents, and attempt to bring all rents at par with a hurriedly prepared and vague rental index produced by RERA. I am sure the decision makers behind this plan must be confident of a robust economy without a window or sight to see the job losses, cutting down of rental allowances by companies, stock market down-turn, oil prices slump, trading market slump, globally eroding profits of companies across the board. Not sure then when this circus will come to an end. Of course the people will only get more of this through the memo postings that we call Press.
Well I guess there will some upside to people departing from the UAE, as the longer we all wait now to apply for the Emirates Identity Card, the shorter the queues will get for a piece of plastic that the FNC have said foreigners do not need!
Even if 1500 jobs per day being the job loss, how does that change the demographics, I really fail to understand. I think Mary Nicola feel that many job losers may have taken a lot of bank loans and those loans will go bad. Guess, that is why the banks are worried.
Desert will turn back into desert with abandent buildings,shopping malls,flyovers.