Complex Made Simple

GCC Expat exodus: 10% drop in UAE’s population expected

Whether employed with full benefits, furloughed, experiencing salary cuts, or unemployed, the economic situation is looking dimmer and dimmer for expats living in the region. Time to leave?

COVID-19, in Q2 of 2020, may cost the equivalent of 305 million full-time global jobs Up to 40% of employees across the UAE have not had a salary increase for 2 years A process of “Saudization” will see an estimated 1.2 million foreign workers leave the kingdom by the end of 2020

There is no rosy picture to paint for expats living in the region. Whether employed with full benefits, furloughed, experiencing salary cuts, or unemployed, the economic situation is looking dimmer and dimmer and chances are it will become more and more unsustainable for expats to stay put.  

This is made worse by government efforts to nationalize the workforce.

Facts don’t lie.

Dire outlook

Economies in the Middle East are forecast to shrink by 7.6% this year, twice as much as previously estimated, according to a forecast by Oxford Economics. 

According to the International Labor Organization (ILO), 1.6 billion informal economy workers could suffer “massive damage” to their livelihoods. The COVID-19 pandemic, in the second quarter of 2020, may cost the equivalent of 305 million full-time jobs.

With nearly half of the population in the UAE currently facing a pay cut and most of them foreseeing the reductions to continue for the next six months, many wonder whether it is time to look elsewhere for a job. 

In the UAE, 76% of 25 to 34-year olds would set up a second income stream, 77% of all 18 to 44-year olds would reskill compared to only 56% of those aged 55 and over.

These numbers were revealed based on a Standard Chartered survey done among 12,000 adults across twelve markets, including the UAE.

The survey found that COVID-19 is significantly impacting personal finances, with 50% of the UAE population, estimated at 9.9 million, currently earning lesser than normal, and 60% of that expecting the pandemic to further cut their income the next 6 months. 

Up to 40% of employees across the UAE have not had a salary increase for 2 years, and 71% have not been rewarded a bonus in the last 12 months, disclosed a study by Tiger Recruitment in December 2019.

Expat exodus

Expats comprise approximately 70% of the total population in Kuwait and close to 90% in the UAE.

Around 1,183 job contracts for expats working across 48 governmental agencies in Kuwait have been canceled, according to Al Rai, a Kuwaiti newspaper. The culprit: Kuwaitization.

In 2018, around 50,000 expats working in governmental agencies were laid off. 90% of the 1.4 million Kuwaiti population works in the public sector.

Kuwait’s Civil Service Commission announced that since 2017, 13 out of 16 governmental agencies (9 have 95% Kuwaitization) have achieved Kuwaitization towards shifting the public sector workforce balance towards 100% of jobs are held by Kuwaitis. 

According to a report by the Civil Service Commission, around 79% of all employees working in the public sector are Kuwaitis and the rest are expats. 

A process of “Saudization” will see an estimated 1.2 million foreign workers leave the kingdom by the end of 2020, opening up opportunities for locals. Jadwa bank in Saudi Arabia projects 300,000 have already exited the country in 2020.

Oman is ordering state firms to replace foreign employees with nationals.

According to Oman’s National Centre for Statistics and Information, 79,000 foreigners left between March and June of this year

In a May 2020 report by Reuters, it said 35 million foreigners form the Gulf’s economic backbone. 

“The expatriate exodus is expected to be larger than after the 2008-2009 financial crisis and the 2014-2015 plunge in prices for oil,” Reuters said quoting the ILO and the International Monetary Fund (IMF).

The region’s dependence on expat workers in vulnerable sectors means the burden of job losses will mainly fall on the expat population. With expat visas depending on employment and the lack of a social safety net, an expat exodus is likely as travel restrictions are eased. This could result in the population declining by between 4%in Saudi and Oman, and around 10% in the UAE and Qatar, Bloomberg reported.

COVID-19 not making things easier

The number of COVID-19 cases in the MENA region crossed 1,787,131 on 14 September, according to Worldometers data collated by MEED.

Countries in the GCC comprise 43.6% of all regional cases (775,158), while Iran alone makes up 22.8% (402,029) of all MENA cases.

Rays of hope

Several government-run establishments in the UAE are available where skilled expats can apply for jobs in leading industries such as healthcare, urban planning, IT, and others. 

In the healthcare industry, for instance, the HAAD license exam is what expat healthcare professionals need to complete to become eligible for employment in medical practices in Abu Dhabi.

The Dubai Health Authority (DHA) has similar licensure requirements, thereby allowing foreign medical professionals like nurses and doctors to apply for jobs in some of the best government hospitals in Dubai.

The main utility providers DEWA and ADDC also have certain job roles open to expats in the UAE.  

Another source for UAE government jobs for expats is the state-promoted event Dubai Expo 2020.  

Government Relations Officers in Dubai can expect a minimum tax-free salary of 5,000 Dirhams ($1,361).

For a look at top government and public sector companies in Dubai, check out Gulf Talent

Housing rents, which take a big chunk out of expats’ monthly earnings, have reported a decline in the UAE. Average apartment rents in Dubai dropped by 13.4% year-on-year in the last quarter of 2019, while villas/townhouses registered a 9% fall, according to property consultancy Cavendish Maxwell.

Finally, economic growth in the region is forecast to return to 4% in 2021 and 2022 as lockdowns are fully eased, global travel picks up and Brent oil prices move closer to $50 per barrel.