Nakheel has embarked on a fresh round of job cuts as the Palm islands developer seeks to reduce costs and nears a deal with hundreds of creditors after a cash injection of US$8 billion (Dh29.38bn). Just over 1,000 employees now work for the Dubai World-owned property developer after a series of redundancies that began at the end of 2008, a senior official said.
At least 50 people across all functions of the company have been laid off in recent weeks, bringing the company's total workforce down to less than a third of its 2008 peak, he said. "There were about 3,800 staff in 2008 and now there are just over 1,000. Some of the recent jobs were lost in human resources, others in IT or commercial," said the official who asked not to be identified. Nakheel is restructuring about $10.5bn in debt and has offered a deal to trade creditors that could mean a five-year wait for payment.
The Dubai Government said in March it would inject about $8bn into Nakheel. The developer's owner, Dubai World, is seeking to restructure about $23.5bn in debt. Nakheel confirmed the job losses but declined to give a precise figure. "As part of the restructuring process, Nakheel will continue to readjust its current business objectives to accommodate current market conditions," the company said. "In doing so, the company also evaluates resource restructuring to ensure efficiency and optimisation of skill and talent."
Nakheel was among the first Dubai developers to shed jobs as it sought to reduce costs when the onset of the global financial crisis gripped the property market towards the end of 2008, causing prices to fall by almost half in some cases and projects to stall due to a lack of liquidity. Nakheel has also scaled back compensation packages as it seeks to reduce redundancy costs. The initial round of cuts involved the loss of 500 jobs, while a further 400 people were made redundant in June last year.
At the time, staff were given paid notice periods of either two or three months along with other benefits such as relocation costs, or allowing them to retain their medical insurance coverage. "Gratuity payments made up the rest of it, which is why my package worked out to about six months' pay in the end," said a former director at the company who was made redundant last June. "They would keep your visa open until the end of the notice period and would pay your relocation costs if you left the country."
Another senior member of staff, who spoke on condition of anonymity and who recently received a termination letter, said these terms had been withdrawn in the latest round of cuts. "That's all gone. There was just one paragraph in the letter saying 'your contract has been terminated, your last working day is X' - nothing else. "It didn't even give a reason for terminating. Even when we asked about end-of-service payments they said, 'Come back a day or two before you leave'. In the past, there were at least three pages that talked about benefits and compensation."
Nakheel declined to respond to questions about compensation packages. Thousands of jobs have been cut across the property and construction sectors since the start of the downturn, although few companies are now compensating staff, according to Simon Hobart, the managing director of the recruitment company Millennium Solutions. "Certainly people being let go now are generally not getting anything," Mr Hobart said.