Peter Greaves, who runs DHR's Middle East operations, says after the hectic bull years, a more realistic approach to business prevails in the region - and there are signs of growth
Peter Greaves was appointed last November to head the Middle East business of DHR International, one of the biggest US executive recruitment firms. He talks about the regional business scene, from the point of view of the American "headhunter".
Your business is often regarded as a lead indicator for the general economy. What is it telling us about the UAE's progress?
We see some good news. Major projects such as the Louvre and Guggenheim [museums] in Abu Dhabi plus the first tranche of funding for Union Railway [now Etihad Rail], are back on track, although much is still in the planning stage. In the private sector, certain significant family groups are now looking for expansion.
We're also seeing international firms relocating part of their global function to Dubai from Asia. This is partly due to high property costs in [Hong Kong] and Singapore, compared with lower costs in Dubai, great infrastructure, logistics, tax benefits and an easier time zone. Whilst I wouldn't say there is a huge hire spree currently, we have seen some growth and, just as important, visibility of further growth in the medium to long term.
In particular, what about the financial sector? Have the troubles of euro-zone banks had an effect on recruitment in the Gulf?
Yes. We have definitely seen some European banks pulling capacity in trading and capital-markets capability out of the region.
Either they're going back to Europe, where some of those recalled will be facing the music, or they're going elsewhere in the emerging-markets scene, like South Africa.
It's inevitable that as the strength of European balance sheets has declined, they will reduce their presence in places where they're not making that much money, and that includes the Middle East at the moment.
For the jobs market, the figures speak for themselves: at the beginning of last year, there were over 100 brokerages, today approximately 45, hardly surprising when [market] volumes dropped by approximately 90 per cent from the bull year of 2007.
What has happened to top-level executive salaries and conditions over the past two years? Is the "expat package" still relevant?
There are still a small number of "no-expense-spared" hires being made, especially when an organisation has suffered by hiring the wrong people by not previously having a structured hiring policy. At the next layer, yes, we're seeing some reduction of benefits; reduced housing in line with market conditions, clubs and education. Cash benefits and bonuses are now more often converted to deferred stock options, even clawed back in some cases for poor performers.
Many analysts believe Saudi Arabia will open up its financial sector more quickly this year. Have you seen any evidence of this?
In some ways, yes, but it's complicated and not particularly ripe for expats. The commercial banks are doing well, particularly the big-balance-sheet lenders both local and multinational, and you can see why.
I was in Jeddah and Riyadh last week and there is a healthy buzz, the roads are ridiculously busy. It's hard to find a hotel room or book a decent restaurant. Like Dubai in 2007, cranes are going up everywhere. However, there are still limited deals available for the investment banks, so just a handful of the leading Saudi and international banks, such as HSBC, are doing well.
Despite the buzz on the streets, it's more difficult for expats to get involved. All banks regulated by Sama [the Saudi Arabian Monetary Agency] have to meet an 86 per cent Saudisation ratio. Previously, the ministry of labour only required 60 per cent. Today, if you don't hit targets, you could be in serious trouble. This drive to open up jobs for a rapidly growing young workforce has resulted in the government increasing its Saudisation programme across all sectors.
You've just moved to head up a big US business in the region. What's the long-term game plan?
After the crazy bull years and now the bear, companies and people have a far more realistic approach to business in the region. There are US firms coming in for the first time who have done their due diligence. They see opportunity, they see the UAE in particular as the hub for growth and the launch pad into the population growth markets of Saudi Arabia and the region.
Despite the gloom, we're seeing more firms looking to grow, especially from Asia, India and the USA. Most people I meet believe 2012 will be a year of two halves; the first painful, the second more buoyant.
Some smart banks, family groups and corporates that have cash are looking to take advantage by acquisition and by hiring the best people.
I will not be buying the Lamborghini in 2012, but I can see light at the end of the tunnel.
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