Business News

Thirty per cent of UAE companies ‘plan’ workforce cuts: survey

Dubai: Nearly 20 per cent of businesses operating in the UAE have put a freeze on salaries, while 30 per cent “have” plans to cut their workforce numbers, according to the annual survey conducted by the consultancy Mercer. And 17 per cent of companies delayed handing out 2020 salary increases after the COVID-19 strike, most likely by six months or so.

These are the stark numbers generated on what UAE businesses are doing to cope with the pandemic fallout. Some of the bigger organisations have already gone through the process of headcount reductions, while salaries were cut by 30-50 per cent. Some of them still retain the salary cuts, until further notice.

According to Ted Raffoul, Career Products Leader – MENA at Mercer, “10 per cent of companies reduced salaries, but almost all of these were on a temporary basis. Although uncertainty continues into 2021, UAE companies are making progress towards enhanced business strategies, with a majority expecting new working arrangements to continue to evolve towards permanent policies.”

Where salaries could rise
The biggest gains could be in life sciences (4.5 per cent) and consumer goods (3.8 per cent) industries. But the energy industry will likely see some of the lowest increase in salaries with a 1.9 per cent forecast, according to Mercer.

Steep cuts

The 30 per cent of organisations planning job cuts expect an average 10 per cent reduction in their workforce. The biggest impact will be felt in retail, and if December/January sales do not pan out as retailers expect, this is where the pink slips are most likely to emerge from.

Among those industries seeing gains in headcounts, there is logistics, specifically for express and last-mile services and set off by e-commerce demand.

“Even though we expect uncertainty to span into 2021, the Total Remuneration Survey results promise a more optimistic new year as companies are increasingly reporting positive hiring sentiments compared to those indicated at the onset of the pandemic,” said Carolina Vorster, Workforce Products Leader, MENA at Mercer. (The survey tracked more than 500 companies in the UAE.)

25
%

Percentage of companies that reported an increase in productivity from employees working from home

Stick with flexible

But remote working and flexible hours will be part of the evolving job landscape… for good. “Companies continue adapting to the new normal with 55 per cent anticipating keeping flexible working arrangements once the pandemic is over,” said Vorster. And they have “proved their commitment towards employees by offering home subsidies for remote workers such as online learning, covering the cost of office set up and furniture, mobile phones and more.”