Low-skilled expat workers in Middle East worst hit as hiring drops 50% over coronavirus

Low-skilled expat workers in Middle East worst hit as hiring drops 50% over coronavirus
Expatriate workers returning from Egypt, Syria, and Lebanon arrive at a Kuwaiti health ministry containment and screening zone for COVID-19 coronavirus disease in Kuwait City on March 15, 2020. (File/AFP)
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Updated 14 July 2020

Low-skilled expat workers in Middle East worst hit as hiring drops 50% over coronavirus

Low-skilled expat workers in Middle East worst hit as hiring drops 50% over coronavirus
  • In June, job opportunities in the UAE began to slightly increase
  • One million of five million Egyptians working in Arab countries will be terminated by the end of 2020

DUBAI: The labor market in the Middle East has been severely impacted by the coronavirus disease (COVID-19) pandemic, leaving millions of expat workers with no choice but to pack their bags and leave.

Hiring activity has dropped by 50 percent from 2019, a Gulf Talent analyst told Arab News.

In Kuwait, about 1.5 million expat workers are expected to leave the country by the end of 2020 due to the economic downturn after the state forced companies to cut their workforce.

The expats, who “are either illiterate or can merely read and write,” were not the country’s priority, Kuwait’s Assembly Speaker Marzouq Al-Ghanem said.

“While some officials in Kuwait have echoed these sentiments, political gridlock in the country’s parliament has thus far prevented decisive movement on the labor front. However, political momentum for labor market reforms that reduce the number of expatriates in Kuwait seems to be gaining speed,” Dr. Robert Mogielnicki, resident scholar at the Arab Gulf States Institute in Washington, told Arab News.

In Saudi Arabia, 1.2 million expat workers are also expected to leave the Kingdom this year, according to the Jadwa Investment Company’s latest figures.

In Egypt, it is estimated that one million of five million Egyptians working in Arab countries - especially in the GCC - will be terminated by the end of 2020, local daily Egypt Today reported citing the head of Expats Employment Unit at the Chamber of Commerce Hamdi Imam.

He added that Saudi Arabia - which has three million Egyptians working in it - has suspended multiple mega projects. And in Kuwait, he added, many Egyptians do not have contracts as they are irregular workers and carry expired residency permits, causing them to leave the country.

Low-skilled workers in the Gulf region will struggle the most when it comes to securing their jobs. They depend on actions taken by governments to address the socioeconomic concerns of citizens, Mogielnicki said. The higher-skilled employees have deeper socioeconomic networks and more labor market flexibility, he added.

Wages have also dropped significantly, causing applicants to expect much lower salaries than prior to the outbreak. In February 2020, jobseekers anticipated their next job would offer them an average wage of 14 percent more than their previous job but in today’s market, the average salary payment expected is just 2 percent higher, Gulf Talent analyst said.

In June, job opportunities in the UAE began to slightly increase, yet they still remain lower than the levels seen before the closure of schools in March, a report by Gulf Talent said.

Expats in Gulf Cooperation Council countries are struggling to secure their jobs, as Gulf states are calling for an increase in workforce nationalization in government entities as well as market forces impacting private sector employers, Mogielnicki said.

“Although countries around the world may be looking inward these days, it is impossible to ignore the forces of globalization. Both globalization and nationalism will remain pertinent forces shaping the contours of Gulf labor markets for the foreseeable future,” he added.

Foreign employees working in Oman’s health sector institutions have also been at risk since February due to the government’s proposal to hire Omanis in technical positions as part of the Sultanate’s nationalization plan, the local Times of Oman reported.

But in the UAE, medical professionals witnessed an increase in demand compared to the period prior to the COVID-19 outbreak, as 18 percent more interview invitations were received by applicants in April than in February.

When asked about the outlook for the labor market by the end of 2020, the Gulf Talent analyst said the presence of both the pandemic and lower oil prices forecast a recession in the majority of countries in the region, and more job losses would continue to take place.

“At the same time, some hiring activity should pick up as companies restructure, look for new skill sets or lower-cost employees, and to replace people who leave,” the analyst added.

Mogielnicki said he expected the aviation sector to remain affected by the pandemic well into 2021, adding that it was one of the largest employers in the region. “Industries that rely primarily on the transnational flow of people and, to a lesser extent, goods, will continue to suffer for some time. Industries involved in the provision of digital services and other technology-based platforms and applications will fare better,” he added.

Gulf Talent also said it expected the aviation sector to continue to be affected, with the hospitality and commercial real estate sectors added to the list. The analyst said it may take longer for the aviation sector to get back to previous levels, as business travel and work patterns may have changed permanently by the current shift to remote working.

“The Gulf region has a large service sector, and not all of these jobs can be done remotely. EdTech and HealthTech platforms have enabled many educational and healthcare services to function virtually. Other service-related industries that rely on in-person interactions may struggle to manage lower levels of customer demand over the coming months,” Mogielnicki said.

Saudi private sector rebounds with growth at 10-month high

Updated 21 min 6 sec ago

Saudi private sector rebounds with growth at 10-month high

Saudi private sector rebounds with growth at 10-month high
  • Steep rise in sales and growing business confidence spark jump in purchasing, hiring activity

RIYADH: Business activity in Saudi Arabia has risen to its highest level since January this year, showing the Kingdom’s economy is beginning to overcome the worst effects of the coronavirus pandemic.

According to IHS Markit’s Purchasing Managers’ Index (PMI) Survey, the acceleration of output growth in the Saudi economy in November was driven by a steep rise in sales and strengthening business confidence.

The survey found that input purchasing rose, while employment growth also returned for the first time since January. Input cost inflation also quickened, leading to a stronger increase in average output charges.

The index has now registered above the 50.0 no-change mark for three months in a row, highlighting a sustained recovery after the economic downturn due to the pandemic.

The Saudi PMI rose to 54.7 in November from 51 the previous month — the strongest improvement since January. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared with the previous month, and below 50 an overall decrease.

Both domestic and foreign sales rose last month, marking only the second upturn in new export orders since February.

Business confidence for the year ahead also improved notably during the month. In particular, firms were encouraged by the Saudi government’s easing of lockdown curbs and news of a breakthrough in the development of a vaccine.

Accelerated rises in output and new orders led Saudi firms to sharply expand purchasing activity during November. In addition, hiring activity turned positive and a number of companies linked increased employment to rising demand.

Commenting on the latest survey, David Owen, an economist at IHS Markit, said: “A third successive rise in the Saudi Arabia PMI pointed to an economy getting back on its feet in November. Supported by output and new business growth reaching 10-month highs, the data suggests a strong end to the year for the non-oil private sector. Notably, employment started to rise, while business confidence strengthened in the wake of encouraging vaccine news and sharper demand growth.”

Saudi economist and financial analyst Talat Zaki Hafiz told Arab News: “The improvement is due to many factors, such as the reopening of the market with the ease in lockdown and, finally, the lifting of the curfew. The return to normality has had a significant impact on private sector performance.”

Hafiz added: “Things will get much better by the next year. We have also noticed an improvement in oil prices recently and this will improve things significantly.”