Downturn hits professionals in Gulf

Saudi Arabia, 10 Dec 2009

RIYADH - Professionals working in Saudi Arabia have been hit by the financial downturn, with almost two-thirds not receiving any pay increase and one in seven losing his/her job this year, according to a study released by GulfTalent; a leading online recruitment firm in the Middle East. The force of the crisis is more evident in other Gulf states, especially the UAE, where 16 percent of professionals have lost their jobs and hundreds of thousands of workers are returning home after losing their jobs.

The study said, "The Saudi market has been a particular blessing this year, compared to the situation in companies operating across the Gulf region." Given its large size and continued growth in some sectors, many firms have been able to expand their business in the Kingdom, compensating for reduced activity elsewhere, it added.

Furthermore, contrary to the speculation of recovery in 2010, the year will bring no respite for professionals hoping to get significant pay increases, as the report forecasts the average pay rise to remain low.

Companies in Oman are expected to lead Gulf nations with 9.7 percent pay rises, while Kuwait-based companies are likely to give the lowest increases, 4.2 percent. Based on the findings of the study, average salary increases across the six Gulf countries over the 12-month period to August 2009 fell sharply to 6.2 percent compared with 11.4 percent over the same period last year. Pay rises in Saudi Arabia stood at 6.5 percent, compared with 9.8 percent last year, the smallest drop in the GCC countries.

The study said, "The massive spending by the Saudi government on infrastructure projects this year has helped maintain economic activity." According to the study, reduced demand for talent and greater availability of candidates both regionally and internationally has shifted the balance of power from candidates to employers, easing upward pressure on salaries in Saudi Arabia and the Gulf states.

About 60 percent of professionals surveyed had not received any pay increase this year, compared with only 33 percent last year.

Moreover, for the first time in years, average pay increases in most Gulf countries have exceeded the rate of inflation. "As a result, some residents saw an improvement in their quality of life and saving potential, particularly in Dubai and Doha where rents have fallen by over 30 percent this year," said the study. In the Gulf, the study reveals that 10 percent were made redundant; the figures were highest in the UAE at 16 percent and lowest in Oman. On a sector basis, real estate had the most drastic cuts with 15 percent losing jobs.

Referring to the termination of foreign workers in the Gulf, the study pointed out that many terminated professionals and general workers had been relocated elsewhere in the region. In particular, many shifted from Dubai to neighboring Abu Dhabi, Doha or Saudi Arabia, it noted. As for the outlook for 2010, the study said that a total of 15 percent of companies surveyed reported planning further job cuts. The study is based on a survey of 24,000 professionals in the six GCC countries, as well as interviews with regional business leaders and human resource managers.