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Abu Dhabi, UAESunday 24 June 2018

UAE's 'good old expat packages' fade away as companies target younger professionals

Families squeezed as budget-conscious companies are looking to lower-paid young professionals instead

Skyscrapers along Sheikh Zayed Road from Jumeirah. Getty Images
Skyscrapers along Sheikh Zayed Road from Jumeirah. Getty Images

A shift in the employment market is seeing companies hire more young professionals on lower wages amid a reluctance to subsidise the living costs of employees' families.

Slashing living allowances and driving a hard bargain on wages is being seen as a long-coming correction in the jobs market, analysts told The National.

But even with reduced salary and benefit packages and the cost of living on the rise, the UAE remains a highly attractive destination for jobseekers.

“The good old days of the eye-watering packages are long-gone”, said Gareth El Mettouri, associate director of the recruitment consultancy Robert Half Middle East.

“We’re seeing some of these fringe benefits being removed, so we’re not seeing clients pay for schooling any more, and if they are it’s normally capped at two children and a certain amount, whether that’s Dh20,000 or Dh30,000 per child,” Mr El Mettouri said.

As an expected consequence, last month EdArabia research found school fees in Dubai had fallen by up to 15 per cent in the past year, as schools themselves feel the need to be more competitive and ensure parents are choosing them.

Business class flights used to be standard for senior-level hires, but “now we’re seeing economy.”

But some industries are picking up.

According to the new Robert Walters Middle East jobs index released last week, adverts for professional positions rose 25 per cent in the fourth quarter of 2017 and the first quarter of 2018 across the region, with demand in the UAE is strongest for banking, financial services and accounting.

Chris Greaves, managing director of Hays Gulf Region, which recruits for mainstream jobs up to top level executives, says the company gets 9,000 applications a month, from all nationalities.

“The desire to relocate here and to take up employment is phenomenal, and it’s from all parts of the world, in all job sectors,” he said. “It’s just a relentless number of applications coming in.”

In Hays’ 2018 GCC Salary & Employment Report released in January, they found a polarised jobs market, with more than a third of employers cutting jobs, but four in 10 adding to their numbers. Another interesting aspect of the survey, which assessed 4,250 working professionals across the region at the end of 2017, 9 per cent of respondents had their salaries reduced in some way over the last year.

Lower salaries

For those who have jobs, companies are continuing to be “very, very cost-conscious” over salaries, and are “squeezed” due to pressure from their clients as well as the rising costs of running a business and a work force that wants pay rises but isn’t getting them, said Greaves.

“It’s not unusual for us to get an interview for people and then the company will offer them a lower salary than what they are on,” said Greaves. “And you think, ‘why would they do that?’ It’s because their accountants have very, very strong controls over salary inflation within the business.”

And people do opt for the lower salaries, he said, whether it’s for personal reasons, to get out of their current working situation or to move to a more respected or well-known brand.

Employment packages are undergoing big changes. All-in-one payments are now most common.

However, one reason those “good old classic packages” are fading away is changing demographics, with a lower age and career level emerging in the expatriate workforce, said George Karam, MENA managing director for Korn Ferry Hay Group.

“For the most part, people come earlier, before they even have families ... before they have things to worry about,” he said. “So that is also helping packages normalise.”

One 35-year-old Pakistani mum-of-four echoed the concerns of others when she spoke to The National about uncertainty for the coming months. With rumours that her engineer husband could lose his job and after five years in the UAE, many of it paying higher-than-expected rents, now could be the time to return to Karachi.

“Of course, spending so much here we haven’t invested in our country back home,” said the woman, who did not want to be named. “So when we go there now, it will be a whole different story.”

Breadwinners leaving families at home

Without getting all school fees covered it’s becoming more common for bread-winners in the mid-level salary range from within the region – Egypt, Jordan, Lebanon, even India, Turkey and Greece – to leave their families at home, he said.

In the face of shrinking packages, Svetia Deshais, a financial adviser based in Abu Dhabi, said some of her clients are getting creative at cutting costs, even considering homeschooling their children.

Abu Dhabi, U.A.E., January 28, 2018. Svetia Deshais, a financial planner based in Abu Dhabi. She has three kids (L-R) Raffael, six, Enzo, three and Nina, four. Victor Besa / The National Business REPORTER: Gillian Duncan
Svetia Deshais, a financial planner based in Abu Dhabi, said more of her clients are considering homeschooling. Victor Besa / The National

Others with more vulnerable jobs and inflexible passports who have sought refuge in the UAE from war-torn countries have begun the long process of seeking to emigrate to Canada or Australia, just in case.

Despite jitters like these from expatriates who fear they will lose their positions, and the scary reality of those who already have, recruiters say the employment situation is far from doom and gloom.

Some clients who left after job losses – or because they wanted to move home – are trying to return, Ms Deshais said. And although salaries are flat in the UAE, rents are generally coming down, said El Mettouri at Robert Half.

And the zest to come to work here lives on. In a recent survey conducted with an independent research firm, 275 general managers from across the UAE were asked if the country was still attractive for expats compared to five years ago. 32 per cent said it was still very attractive and 34 per cent said it was somewhat attractive, with 27 per cent of respondents listing lifestyle and leisure as the top draw.

Still very attractive

Of those who said the UAE was no longer attractive, 27 per cent cited the rising cost of living, while 25 per cent named VAT, 18 per cent pointed to stagnant salaries and 16 per cent general economic uncertainty.

Sam Instone, founder and chief executive of financial services company AES International, has heard the lament that the UAE is facing “another 2008” but says it’s not reflected in his client base.

“I do hear lots of people say ‘the world is ending, it’s all terrible’, but we always see, this country just keeps on expanding, we keep seeing more companies, more buildings appear, more expatriates appear,” he said.

And from Instone’s perspective, cost-cutting isn’t the only reason that benefit packages are shrinking.

“The traditional 'hardship' packages of expatriates moving from America or the UK to work in the Middle East and being compensated highly for it are gone, because it’s really an employment destination of choice now,” he said.

“Everyone wants to come and work here now … I’d call it a paradise posting."