Todays’ business environment is volatile, uncertain, complex and ambiguous – the impact of the headwinds in the global and regional markets is so strong in fact, that experts have introduced a new acronym to describe the current economic scenario: “VUCA”. How popular this name will become in the minds of the public remains yet to be seen.
What is certain, however, is that the combination of China’s economic slowdown, negative interest rates, social and regulatory circumstances is taking its toll on the global employment arena. Even so, the current scenario is not all negative in the Gulf. According to the Monster Employment Index (MEI), job demand for the GCC region exhibited the first positive monthly growth since November 2015, up by seven percent. This trend is expected to continue, as hiring activity exceeding the year-ago level by eight percent in March 2016.
Despite negative economic projections, growth momentum in the GCC is still positive. There is no doubt that falling oil prices have hit the economy hard; we see this on the back of banks’ tightening liquidity and governments’ austerity measures to curb budget deficits, resulting in employers’ cautious approach to hiring this year. Skepticism is particularly visible in the UAE’s financial services sector and energy sectors, where a number of banks are anticipating a contraction in economic growth, thus already announcing job cuts in response to the changed economic reality.
Despite such significant macroeconomic challenges, online recruitment activity in the UAE rose by 24 percent in March 2016 as compared to the same time a year ago, March 2015; and while the annual growth momentum eased 21 percentage points between February and March 2016, the country still remains one of the best performing GCC markets in terms of employment opportunities. When comparing MEI findings, the UAE performed better than its neighboring countries Egypt, Saudi Arabia, Bahrain, Oman and Qatar; Kuwait overtook the UAE by only two percentage points.
Analyzing the effect of a sustained decline in oil prices on the UAE’s job market, the country saw a lot of fluctuations in the UAE job market since the decline. This year especially, it is as if the UAE economy is sending mixed signals: Just recently, UAE banks announced their financial results for the first quarter of 2016; these were extremely mixed in terms of profitability. While some posted a net profit increase on the back of higher revenue and setting aside less cash for bad debts, other reported losses. While there is no doubt economic growth is adversely impacting hiring activity of a number of businesses, there are other sectors like Healthcare which are still hiring robustly.
Looking at MEI data from Q1 of 2016, the outlook for the UAE Healthcare market is positive. Although the road has been bumpy, healthcare is leading the industry growth charts in the UAE for the second month in a row with a 38 percent growth in online job posts in March 2016, as compared to March 2015. The job demand in the industry is not surprising, given the development of the Dubai 2021 Health Strategy to improve the quality and cost effectiveness of health services in the emirate, and strengthen the collaboration between the public and private sectors. With these plans in place, the healthcare market in the UAE is projected to reach $19.5bn in 2020.
Taking the example of healthcare, the rise of public private partnerships becomes almost inevitable to save on costs. What the economy needs in times of austerity is to create a new order for promoting the growth of the UAE – and welcoming private sector participation will certainly help the governments to do exactly that: manage the rising costs. So far, the UAE seems to have done well in securing robust hiring activity in non-oil sectors. In the month of March, the second best performing industry is Retail/Trade and Logistics, with 36 percent growth in online job posts.
Followed by Consumer Goods/FMCG, Food & Packaged Food, Home Appliance, Garments/Textiles/Leather, Gems & Jewellery, with a growth of 32 percent in job opportunities posted online year on year to March 2016. The outlook was gloomier for job seekers in Advertising, Market Research, Public Relations, Media and Entertainment; Hospitality; and Oil and Gas sectors, which exhibited a negative drop of 13 percent, 17 percent and 22 percent respectively.
According to the International Monetary Fund, the reason why the UAE continues to achieve new levels of economic growth despite a strong US dollar and low oil prices is due to its ‘prudent financial policies and sound economic methodology’. Early market liberalization and deregulation has successfully led the country to open up its banking sector to domestic and foreign financial institutions, while also attracting major non-oil foreign trading partners and suppliers.
In 2015, the UAE’s non-oil trade hit Dh1.56 trillion and represented about 68 per cent of the total trade volume in that year. This is significant when viewed against a backdrop of prolonged economic turbulences, and shows how successful the Emirates has been in diversifying the economy when expanding the non-oil sector over the past couple of years. As one of the most diversified economies among the GCC countries, the IMF predicts a 2.5 percent growth for the UAE this year – a figure which is to improve even further, should oil prices recover next year as foreseen.
Whatever the growth outlook for the UAE might be, oil price fluctuations should not be a barrier to employment growth. Analyzing past MEI data, the UAE in particular seems to be well-equipped to rise to the challenge of the post-oil era – and with a new order for promoting the growth in the UAE, businesses might soon be able to get off this bumpy road that, today, seems so full of potholes.
The Monster Employment Index is a monthly gauge of online job posting activity in Middle East based on real-time review of tens of thousands of employer job opportunities across a large representative selection of career web sites and online job listings.
This article was originally published in Banker Middle East magazine
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