Oil price drop takes toll on UAE job market
Hiring slowed down, while number of job seekers decreased
Lower oil prices continue to take their toll on the UAE job market, according to Morgan McKinley’s Q2 Employment Monitor report.
“In Q1 2015, oil was cited as a factor that is affecting growth in the UAE’s professional recruitment market. This hasn’t changed, except that Q1 of 2015 saw 8,213 new jobs being created compared to Q2 of 2015 when 8,109 professionals were hired – amounting to a 1% drop in growth,” the recruitment consultancy said in a statement on its website.
“The number of job seekers has decreased. This is quite worrying as there are many other options available for them – if you look at the employment market in the UK, Ireland, America, Australia and Asia, there is no need to come to the UAE anymore and yet two years ago everyone was looking to work in Dubai”, says Trefor Murphy, managing director for the Middle East and North Africa at Morgan McKinley.
He continues: “The market has stabilised over Q2 2015, but without any real growth in the overall professional hiring market. The oil price went back up to $60 per barrel toward the end of the quarter, but it needs to go up by a further $5-$10 a barrel to make new drilling and exploration projects viable.”
However, the falling oil price is not the only reason for sluggish recruitment, as the consultancy notes.
“The summer months of Q2 have seen the expatriate community return to their home countries as the kids are on school holidays. Ramadan is another reason that explains the tail-off in growth.
“The banking sector has had a strong start to the quarter but certainly slowed down over the Ramadan period”, he comments. Nevertheless the UAE’s banks have aggressive plans for growth – particularly with their sights on growing their international network, and many of them have offices in cities such as London. They are also expanding to countries such as Egypt, Indonesia and Pakistan.
In spite of the slight drop in growth the UAE’s hiring market is forecast to return to a level of normality for the rest of 2015. Murphy predicts that there will be further investment in the Dubai International Financial Centre, the Abu Dhabi Global Market, the financial services and banking sectors. “There will also be big infrastructure, property, oil and gas projects as well as alternative energy ones”, he says.
Overall, Murphy believes that the professional recruitment market will see a 5-10% growth rate per quarter for the rest of the year, but much depends on the stability of oil prices.
“The international nuclear agreement with Iran has, for example, had a negative impact on the price of oil – even when the peace deal was signed. The problem is that there is much oil sitting around and this will increase the supply of oil on the market. In turn oil prices could drop even further, and oil-dependent countries such as the UAE could in turn see a decline in jobs growth,” the statement concluded.