What is the UAE jobs outlook for 2020?

As optimism slowly returns to the UAE jobs market, employers are concerned about cash flow management and are struggling to attract and retain talent for 2020, a new study found. On the flip side, technologically savvy employees and those with ‘soft skills’, such as critical thinking and emotional intelligence, will be the most in demand and secure the largest pay raises.

Cash flow management is the top concern for 52 per cent of chief financial officers interviewed in the UAE, and talent attraction and retention came in second with 47 per cent, according to the 2020 Salary Guide from global recruitment consultancy Robert Half.

“Good candidates are always going to be in strong demand, whether that be across multinationals and SMEs,” says Gareth El Mettouri, associate director of Robert Half UAE. “Retaining and attracting the better talent is a top priority with employees providing incentives, such as ongoing training, flexible working, et cetera.”

The annual report identifies hiring trends based on several Robert Half surveys, including 75 interviews with CFOs and 200 responses from hiring managers across the UAE. It also documents average salaries, based on placements made by the recruiter and actual starting salaries paid by clients in five sectors: accounting and finance; financial services; technology; human resources and administration; and legal.

Positive factors influencing hiring in the UAE include a perceived return to optimism in the GCC, government initiatives that have increased the ease of doing business for foreigners and an entrepreneurial boom.

“The future is looking bright for the GCC region, as oil prices, retail and infrastructure investments bolster optimism in business leaders,” the report says.

Last week the International Monetary Fund revised the UAE’s gross domestic product growth forecast downwards to 1.6 per cent from 2.8 per cent in line with revisions in global growth figures. However, the projection for 2020 is 2.5 per cent, higher than the 1.7 per cent growth seen in 2018 and the paltry 0.5 per cent growth in 2017.

The fund assumes that the average price of oil will be $61.78 a barrel in 2019 and $57.94 a barrel in 2020. That is again much higher than the prices seen between 2014 and 2016, when it fell below $30.

A series of UAE government initiatives, such as 10-year long-term residency visas, have also helped spur new businesses and encourage foreign investment.

“It has given confidence to employers setting up here. A lot of limitations, a lot of roadblocks are being removed,” says Mr El Mettouri.

Candidates ... are not only moving for increase in salary. They’re moving for stability, they’re moving for opportunity, they’re moving for personal growth development.

Gareth El Mettouri, Robert Half

The UAE has also seen significant growth in e-commerce and FinTech start-ups. E-commerce transactions in the UAE are forecast to reach $16 billion (Dh59bn) in 2019 and grow 23 per cent annually between 2018 and 2022, according to a joint study by Dubai Economy and global payments company Visa. The number of FinTech start-ups in the Mena region is expected to multiply to around 250 by 2020 from six in 2005, according to a report by Mena Research Partners.

“The UAE market is starting to pick up. We’re seeing a lot of SMEs and new start-ups and FinTech companies. All these companies are adding headcount,” says Mr El Mettouri.

Here are some of the insights for the UAE jobs market in 2020:

Salaries

Last week Mercer published its annual Total Remuneration Study, forecasting a 4.5 per cent increase in overall base salaries in the UAE in 2020. However, there are a couple of caveats to this forecast. Firstly, the previous report had predicted a 4.8 per cent increase in 2019, but the actual increase was 4.5 per cent. Secondly, the percentage increase is only on the base salary.

“Depending on the pay mix between base salary (which typically varies between 50/50 and 70/30, although there are certainly outliers), the real fixed salary increase for most individuals would vary somewhere between 2.2 per cent and 3 per cent,” says Ted Raffoul, career products leader for the Middle East and North Africa at Mercer.

Ian Giulianotti, executive director of recruitment and executive search at Nadia Global, says the Gulf recruiter found the “absolutely highest base salary rise was 2 per cent” in 2019. “The justification [from employers] was that rents are going down by as much as 20 per cent,” he says.

The salary increase is still higher than inflation, which the latest IMF report estimates at minus 1.5 per cent in 2019 and 1.2 per cent in 2020.

The percentage also depends on the type of company. Nadia Global’s client base reflects the make-up of the UAE market, which is primarily small and medium enterprises. Of the 500 companies included in Mercer’s study, the majority are multinationals and large employers with an average headcount of 520 employees.

Robert Half’s study did not specify salary percentage increases, saying that “although salary increases are being awarded in some large organisations, many employers are struggling to move beyond their existing salary bandings”.

More than two thirds (67 per cent) of senior business leaders (chief financial officers and hiring managers) said they have denied an employee promotion in the past three years, Robert Half found. At the same time, about a third have increased their base offering to help fill a vacant role. For 13 per cent of employers, salary is a barrier to securing the top professionals.

Employers have to pick and choose which jobs warrant a salary increase. Mr El Mettouri says the positions that have seen a pay rise include chief financial officers within industry and commerce; financial planning and analysis roles; compliance and risk roles within banking; chief digital officers within technology; heads of recruitment and learning and development roles within HR and heads of legal and English-Arabic bilingual lawyers within legal.

Hiring strategies

“Although many larger organisations still have hiring freezes in place, there are plenty of opportunities in the growing start-up community, most notably among FinTech companies,” according to the Robert Half report.

Mr El Mettouri says some companies have had hiring freezes in place for “about the last 12 to 18 months, maybe slightly longer”. There are signs, however, that capital expenditure is increasing, which could mean adding head count.

“Within multinationals, we are still seeing roles being replaced when people leave. But we are also starting to see capex spend coming back to these multinationals, so they are starting to open up to hiring again,” he says.

More local hires

The Mercer report found that the voluntary turnover rate, meaning the percentage of people voluntarily leaving their jobs, increased to 7 per cent in 2019 from around 5 per cent in the last couple of years. Meanwhile, the involuntary turnover rate, the percentage of people being forced to leave their jobs, decreased from 8 per cent in 2016 to 4.5 per cent this year.

These percentages signify an active job market, but also more local hiring. Robert Half and Nadia Global have noticed the same trend. “A lot of our clients are wanting candidates with local experience. We’re not seeing as many clients relocating talent into the market, so that drives movement. We’ve seen it more in the past 12 months,” Mr El Mettouri says.

“Ninety-nine per cent of employers in the GCC will want people who are currently resident in the country that they’re hiring,” Mr Giulianotti concurs.

Digital transformation

As more businesses, such as banks, undergo digital transformation “a lot of clients are now really focusing on the digital and technology skill set of talent when they’re hiring,” says Mr El Mettouri.

Nearly two-thirds (63 per cent) of UAE business leaders said technological understanding is the top skill needed for a digital future, while 52 per cent chose communication skills and 51 per cent technical know-how. Around half said they are planning employee training sessions for new technologies in response to those needs.

Soft skills

Robert Half’s research found that soft skills, such as communication, strategic thinking and adaptability "will rise to prominence in the next few years as workforces change to meet the challenges that technology presents”.

For example, in HR and administration, the soft skills in demand include change management, emotional intelligence, leadership and critical observation.

“This is the first time that we’ve broken out soft skills in our salary guide, because there was such an emphasis on it,” Mr El Mettouri says.

Flexible working

Hiring managers not able to offer a higher salary are attracting top talent by adding on benefits, including flexible working. Candidates at all experience levels are requesting flexible working during the interview process, according to the Robert Half study.

“Flexible working can mean different things to different people. It can mean starting work early, finishing early. For a parent, it can mean finishing at lunchtime, doing a school run and logging back on at home,” says Mr El Mettouri. “We are seeing a lot more employers offering it as a benefit to attract and retain the current talent in the workforce.”

With the competition for talent and concerns over cash flow, employers are having to be more creative. But the good news is that employees are looking for perks beyond salaries.

“Candidates at the moment are not only moving for increase in salary,” says Mr El Mettouri. “They’re moving for stability, they’re moving for opportunity, they’re moving for personal growth development.”