In the first of a five-part series, a YouGovSiraj survey commissioned byThe National looks at a range of business subjects of importance in the UAE - the economy, wages and job security. Asa Fitch reports A survey of attitudes about the UAE's economy suggests many businesses and consumers are coming to accept that the trend during the past year has not been a positive one - and are responding accordingly.
While many companies maintain a positive outlook on hiring staff, about 81 per cent of those asked by YouGovSiraj in a survey commissioned by The National said the country was currently in recession, typically defined as two consecutive quarters of economic shrinkage. A further 10 per cent said the country was in recession but has recovered, while 2 per cent said the UAE had not been in recession.
The economy shrank by 0.67 per cent last year, according to the IMF's World Economic Outlook, although estimates from other economists and international agencies differ. The Government does not publish quarterly inflation-adjusted GDP figures, making the measurement of recessions largely a matter of estimation. The YouGovSiraj economic survey is the first of a five-part series in The National that explores the state of the property sector, consumer spending and saving, a proposed Gulf single currency and efforts to bring more Emiratis into the workforce.
The economic poll follows a long-standing effort among government agencies to both improve the collection of economic data and craft legislation and policies that encourage growth and respond to the obstacles put up by the global financial crisis. As government agencies such as the Dubai Statistics Centre and the Statistics Centre - Abu Dhabi strive to get a better handle on economic trends in the UAE, the country is expected to emerge from last year's low or negative growth. The IMF is projecting 2.2 per cent real GDP growth this year, followed by 3 per cent growth next year.
Yet the relative fortunes of Abu Dhabi and Dubai - by far the two largest of the country's seven emirates - may still be divergent. Many economists expect strong growth in Abu Dhabi, which sits on about 7 per cent of the world's proven oil reserves, on the back of crude prices that have averaged above US$75 per barrel this year. Dubai's economy, based on international trade, financial services and foreign investment in industrial and property developments, may have further to go before registering a recovery. Property prices dropped by as much as half in some parts of Dubai last year, and Dubai World, one of the emirate's biggest conglomerates, is working on a $23.5 billion (Dh86.32bn) debt restructuring deal that is nearing completion.
"For Dubai, we still expect a recession this year," said Brahim Razgallah, the chief economist for the MENA region at JP Morgan. "This year will also be a tough year because of the debt market and the overall background. Asset markets in Dubai will be the major factor in keeping growth rates subdued overall. The performance in Abu Dhabi will be the major driver of growth for this year and next year."
Against that backdrop of subdued economic growth, many companies have either not hired or have reduced their workforces in the past year. Almost two thirds of companies responding to the YouGov survey said headcounts stayed the same or decreased over the past year. Another 69 per cent of companies said salaries either stayed the same or decreased. The UAE's employment market has been hard to figure out in the past year, recruiters say, with huge short-term swings in hiring. Some months, a glut of employers are looking to fill positions. Other months, few companies are interested in adding people.
"What we see is one step forward and two steps back," said Christo Daniels, the managing director of IQ Selection, a recruiting company in Dubai. "The number of vacancies comes in fits and starts. It changes month to month and there's no discernible upward trend. It's reasonably flat." Looking forward, more companies want to hire, the YouGovSiraj survey said. About 40 per cent want to add staff in the next year, almost double the 24 per cent who said they had hired in the year before. Mr Daniels said, however, the employment dynamic had changed since the go-go days of a few years ago when the size of the labour pool and the range of companies looking for skilled staff were well-aligned. Nowadays, he said, many companies were looking to hire but were having more difficulty finding well-qualified candidates.
"The quantity is still here but the calibre has perhaps dropped," Mr Daniels said. "That's possibly because the higher-calibre employees are not as likely to move [to work in the UAE] and so what we're left with are those candidates who are immediately available." The future for hiring and economic growth is complicated and in some ways contradictory. About two thirds of companies surveyed by YouGovSiraj said they expected revenues this year to be about the same or lower than last year and 39 per cent said they had considered moving to a different country during the economic turmoil.
In the coming year 56 per cent said they expected the general outlook to improve. The budget airline flydubai, for one, is planning considerable recruitment during the next year. The airline has grown rapidly since its founding in 2008 and the start of flights last year from the Dubai International Airport's Terminal 2. It now has more than 20 destinations across the Middle East, Asia and Africa.
"As a relatively new and rapidly expanding company, we anticipate that staff numbers at flydubai will roughly double over the next 12 months," said Ghaith al Ghaith, the airline's chief executive. According toMasood al Awar, the chief executive of Tasweek, a property investment company in Abu Dhabi, the economic pall of the past year or two has yielded numerous opportunities in property, finance and other sectors. What is needed now, he said, were new laws to help businesses and, in some cases, consolidation.
"We need legislation to support businesses and little bit of integration between companies," he said. "It's no longer a competitive environment. It's more of a collaborative one." email@example.com