Covid-19: UAE firms hiring workers at 15-20% lower salary

The nature of work is changing in UAE as businesses start open after the government issued relaxations in the COVID-19 regulations. Companies are looking forward to hiring new employees at lesser salaries and there were reports of heavy salary cuts of the excising employees.

New hiring is picking up in the UAE, companies are recruiting new employees at 15 to 20 percent lower salary as compared to pre-COVID-19 period. Temporary pay cut and 4-day work have also become the new norm as firms go for massive cost cuts, according to consultants.

“The good news is that new hiring is slowly picking up as we see more organizations getting back physically to work and starting to fill the essential roles which were stalled per-COVID. The temporary drop in base pay for 3 to 4 months for existing jobholders should end by August/September in the majority of the companies. The average drop we foresee for new joiners is 15-20 percent less than people working at the same level,” said Vijay Gandhi, regional director for Korn Ferry.

This means the expatriates who are looking for a job would want to settle down quickly in the UAE even with a lower salary to avoid moving back to the home country. At this stage, it’s an employer’s market with job losses in key sectors in the UAE.

Professional networking site LinkedIn also said last week that hiring in the UAE has started to recover from a steep fall due to the coronavirus pandemic.

Jason Grundy, managing director for the Middle East and Africa at Robert Walters, said there is no doubt that the global pandemic will affect salary levels in the short-term but the UAE has a track record of bouncing back from global events. “I would expect a drop in the number of new roles available rather than significant and permanent salary reductions going into 2021,” he added.

“Some organizations are reducing their staff working hours to reflect the market and this, in turn, shrinks the fixed costs, others are simple reducing pay. The 4-day week is common across professional services companies but those in the likes of hospitality and travel have had much more severe cuts. The key to holding onto critical staff will be when these cost-saving mechanisms are switched off,” he added.

“Wage deflation is happening in parts of the market but only the most essential and in some cases rarest skill-sets are being hired. The competition for these people maintains the pre-COVID-19 salary,” he added.  

Companies are expected to resort to a 4-day week and salary sacrifices which will be temporary and in some cases on a voluntary basis.

The UAE, like the wider GCC region, continues to provide a competitive total reward if not higher than jobs of similar nature in other parts of the world. The salary growth for new joiners will take time as businesses re-invent to the new normal and optimize businesses with better technology and choosing what they need to start, stop, and continue doing.