Salary freezes and cutbacks in benefits are kicking in for some expatriate employees in the UAE as corporations tighten belts.
But while some sectors are experiencing a slowdown in recruitment because of the oil price decline, infrastructure development is helping others lead the jobs market.
Sanjay Modi, the managing director at jobs portal Monster.com for India, the Middle East, South East Asia and Hong Kong, says companies in the UAE and the Arabian Gulf will show a growth in the number of vacancies along with their overall economic growth. Here he expands on the employment outlook for the UAE.
Are new job roles still being created?
We are not sensing a slowdown in respect to last year. In our last data from July, there was an increase of 37 per cent year on year in the number of jobs being advertised across 12 industry sectors and 11 occupations. The growth is robust because it is not skewed by a couple of industry sectors. In the UAE, eight out of 12 industry sectors are showing growth, led by IT and telecoms jobs, for July. That is because of the government initiatives and investments in the infrastructure, technology and education sectors. It is a good destination for tourism, and so hospitality is showing positive growth. Monster.com does not capture the difference between vacancies advertised for replacement positions and new positions, but from our experience there are new jobs being created and because of attrition challenges there are replacement positions also. If it was pure replacement jobs, which normally happens at a later stage, the first thing that happens is entry-level jobs being curtailed, which we are not seeing.
What sectors are experiencing a slowdown or a hiring freeze?
Apart from oil and gas, we do not see a slowdown in the sectors for recruitment. The slowdown in the oil and gas sector is because of global ramifications, and some organisations are going for a hiring freeze. This phenomenon started six to eight months back, and we expect this trend to continue from a short- to medium-term perspective.
What does the new Monster Employment Index (MEI) UAE report say? [MEI measures the number of jobs being posted online at Monster.com.]
The August data for the MEI will be out in a few days, but we expect the growth momentum to continue and it will be positive growth year on year. Month on month, there is sequential growth in the number of jobs advertised until June. There is a slight drop in July, but we think it is because of Ramadan and the summer. The numbers show an increase compared to July last year.
How are salaries and benefits faring?
We do not capture the change in salaries and benefits, but our take after speaking to employees is that salaries are not the limiting factor when it comes to recruitment, as companies will hire the talent they require. We expect salaries will continue to show a decent growth. It may not be too much on the fixed-component side but on the overall compensation side [such as annual and performance-linked bonuses] I think it will move up.
What is the effect of an increase in UAE petrol prices and the possible introduction of a value-added tax and corporate tax on the employment landscape?
There are some fears around VAT that are unfounded. In a free-market scenario, we might find the absolute price remains the same and companies will reduce on margins. Companies will absorb the VAT as market forces come into play. When it comes to corporate tax, [it is not a hindrance] given the UAE’s excellent infrastructure, security and safety. The UAE will continue to attract companies. It is a good step forward, as companies will evaluate where they can reduce costs and run the business profitably and keep growing. They could cut down on supply-chain inefficiencies or those on the shop floor. There has been a seismic shift from capital investment to intellectual capital. The ability to attract and retain good talent is what differentiates companies. I do not think companies are going to look at reducing costs by reducing manpower. On the contrary, if the business is growing, they might think of adding people to fuel growth.
What about Monster.com. Will it continue to hire?
We have been operating in the region for 10 years and will continue to invest in people and products. We have 15 people at our office in Dubai, which we opened in 2010, and eight people in the one in Riyadh, which we opened in 2011.
ssahoo@thenational.ae
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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