Major US firms in the Emirates are all ready to initiate a hiring drive, but before they start tapping into recruitment budgets managers want to see some definitive signs of economic recovery in this quarter.
The news on the economic front has not been encouraging in recent months. Major listed corporations are still posting billions of dirhams in losses in the fourth quarter of last year. Dubai's debt restructuring process is still a drag on the economy and the IMF last month slashed its GDP growth expectation for the UAE to between zero and 1 per cent. However, US firms here are "cautiously optimistic" about the country's growth prospects.
At least that was the consensus among the senior executives of about 20 US firms, including General Motors, Wyeth Pharmaceuticals and Fulbright & Jaworski, brought together by the American Business Council in Dubai to discuss the new business realities in the UAE market. Is it the right time to expand the businesses and start hiring the talent required to achieve this task? "The general feeling is that [the] economy is doing better than it did in the first quarter of 2009, but the speed of recovery is not as fast as it was initially anticipated," said Jack Montgomery, a senior consultant at one of the world's largest executive search firms, Stanton Chase, and a business council board member.
"Even the companies operating in the oil and gas sector have said the business is good but not as good as they though it would be." Mr Montgomery, who moderated the session on the needs and challenges of human resources managers in the financial crisis, said the US companies had set healthier budgets for hiring this year, but they were yet to start recruiting. "The budgets are in place and they are keen to hire," he said. "But it is not foot on the metal yet."
The wait-and-see policy of US firms is being followed by many other UAE employers. Half of the respondents sampled in a recruitment survey by Bayt.com and the research firm YouGovSiraj said they had plans to hire in the second quarter of this year. Some 24 per cent of the respondents said they would definitely be hiring in the next three months while 26 per cent said they would probably start hiring during that period.
Although the Middle East as a region has performed better than many in the current economic crisis, cost cutting remains a major priority. Ernst & Young, in its global survey of 900 corporations, said more than half of the respondents believed surviving this year would be challenging. Still, those surveyed said they had an upbeat attitude about tackling such challenges. "The region has, in varying degrees, bucked the more extreme after-effects of the downturn," said Tariq Sadiq, a Middle East markets expert at Ernst & Young. "Organisations may be less worried about survival over the next 12 months, but the return to a healthy operating environment is still some way off.
"The overwhelming view is that most companies are still focused on securing the present, which means that companies are still at the early stages of responding to the current environment." Three-quarters of respondents said they believed that there were still major cost savings to be made through improved efficiency and flexibility of operations. And one way is to minimise spending on senior level hiring.
Businesses are actually looking to rationalise salary levels across the board and instead of higher pay cheques are offering career progression training and other incentives to retain talent, Mr Mongomery said. The Bayt.com survey shows that most of the firms are looking to start their hiring campaigns with junior executives and few would be advertising jobs for presidents or other C-level candidates in the months to come.
Some 30 per cent of organisations said they would be looking to employ junior executives, followed by 26 per cent who said they would be looking to hire on an executive level. Just 4 per cent said they would seek to appoint a new president, and 6 per cent would appoint a chief executive officer. Another 6 per cent said they would advertise vacancies for a chief operating officer or a chief financial officer.
"At the peak, businesses were desperate to hire and would offer extraordinary salaries just to bring the talent on board, even higher than those who were already employed at the firm, which led to employee dissatisfaction," Mr Montgomery said. "Firms are not hiring at the moment in a big way but when they do, salary rationalisation will be a priority," he said. @Email:firstname.lastname@example.org