UAE job losses set to continue amid recovery

From ArabianBusiness.com 25 May '09.
Where's this economic recovery happening? Its not happening in my little corner of Dubai where in the last 24 hours two more friends have been made redundant and will leaving the country as there's no work in construction for them. Heard all the 'green shoots' stories blah, blah, blah? You just have to look around you in the UAE to see signs that things here aren't good and they aren't going to improve in the foreseeable future. Raise this question and the response seems to be 'if you don't like it you can leave' and there are plenty of people doing just that or "It can't be that bad because last weekend Dubai Mall /BurJuman/everywhere expect Bin Hendi Luxury Avenue was packed" but how many of those people in the malls were actually buying and how many were there just to escape the heat? If even half the rumoured number of people leave the UAE at the end of the school year (June) and don't return in September, the loss of population will have a noticeable effect on the local economy.

Rents continue to fall. Unfortunately our current landlord lives in a parallel universe where rents haven't dropped, he refuses to lower the rent so we're moving out - the people in the villa next door moved out three weeks ago for the same reason and are living just round the corner at a considerably cheaper rent. We recently looked at a villa in Umm Suqeim 3 that 5 months ago was rented for AED300,000 but now the landlord's asking AED175,000 and still hasn't had a bite in all that time. At this time last year, renting a house in Dubai was a hard task, rents were astronomical and a lot of compounds had waiting lists; now, we drive around the streets and count the "To Let" signs which seem to be growing in number weekly. In the Garhoud area alone, we've looked at maybe 15+ houses, all in the AED170,000-190,000 price range. Last year every one of them would have been in the AED220,000-250,000 range.
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Job losses will continue to take place in the UAE even as economic recovery takes hold, a leading economist in the region warned on Monday.

Further redundancies would happen in the Gulf state over the coming months because the jobs market lagged behind the real economy, said Marios Maratheftis, chief economist at Standard Chartered in the Middle East.

“Inevitably job losses are taking place and, in my opinion, they will continue to take place even as the economy is recovering because the jobs market is a lagging indicator of the economic cycle,” said Maratheftis during MegaTrends, Essential Strategic Insights 2009 in Abu Dhabi.

Despite the economic crisis hitting the UAE in September, it wasn’t until January that staff numbers were cut by many firms, especially those in the real estate, construction and banking sectors, he said.But he said most job cuts had already taken place.

As many as one in four expatriate employees in the UAE have either lost their job or fear they will over the next 12 months, according to a survey released in March by market research company Real Opinions.

Kiwis are flying home dejected from tarnished boom-towns like Dubai

From the New Zealand Herald 24 May 09
You may think its taken a while for the news of the downturn in Dubai to arrive in NZ but, hey, its the rugby season so we have far more important things to worry about. On that subject how good was the Chiefs' win? Super 14 final in Pretoria against the Bulls from South Africa who beat the Crusaders yesterday.
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New Zealanders are walking away from their homes in Dubai, driving to the international airport and abandoning their cars with keys in the ignition, as the golden times suddenly end in the towering emirate.

In London, redundant bank traders - once the young Masters of the Universe - take the Underground's Piccadilly Line to Heathrow when they fly out.

Statistics NZ figures show increased numbers of Kiwis returning home (24,500 in the past year to April) though the numbers have not yet reached the heights of 1991 or 2003.

The upsurge is on the flights from the UK, China, Canada, the US and, of course, the United Arab Emirates.

The Department of Labour says this will boost the housing and construction industries. But, at the same time, it means tougher competition for jobs.

The flight home to New Zealand has been unexpected and infuriating for people like Hamilton's Nicholas Down, 43. When he started work at a Dubai real estate company last year, the first villa he sold was in the city's luxurious Palms development. The buyer paid 60 million dirhams ($30 million) in hard cash. It took three days to count, Down says.

But when the money dried up and his company hired Russian estate agents to offer added inducements - entertaining potential buyers with prostitutes - then Down objected. So his bosses gave him one month's notice.

Down, his wife and two children arrived home in December, after emptying out their Dubai apartment and leaving the car at the airport. He did, at least, mail the keys back to his former employer.

The family was lucky to own a home in Hamilton, and Down went on unemployment benefit until he was able to find work with a receivership company.

Dubai police say they have towed 3000 abandoned cars from the airport carpark - and it's not over yet. There are reportedly 90,000 one-way tickets booked out next month.

Among them are James Hamilton and his family, who will return home when the Dubai school year ends. Hamilton was made redundant from his aviation logistics job in November, but he and his Canadian wife were unable to sell their three-bedroom villa until last month.

"What has struck me most is how quick it hit," he said. "Overnight, construction stopped. People were made redundant from the big corporations, and they were gone within a week."

Hamilton, 35, still hopes to return to Dubai some day. The family is putting some furniture in storage there. In the meantime he will look for work here, using his experience to advise companies on how to trade in the Middle East.

UAE work visas may be extended after redundancy

From Arabian Business 30 March '09

Dubai, along with federal government, 'working on' visa extensions for those workers made redundant.

Individuals whose work visas have been cancelled, following redundancy, may soon be able to stay in the UAE for a longer period of time to find work, according to a report in Emirates Business.

At present, UAE labour and immigration laws require expats who have lost their jobs, to find work within one month - or leave.

The newspaper quoted Hani Rashid Al Hamli, Dubai Economic Council (DEC) Secretary-General, who said Dubai, along with the federal government, is "working on" stretching the grace period for holders of cancelled visas. The length of the likely extension wasn’t given.

The report added that the new policy, which may be announced in the first half of this year, is expected to address the potential cases of job cuts due to the financial crisis. "This is one of the top and urgent issues that we are tackling at the Dubai branch and at the federal level - to have a longer (grace) period. They are working on that, I can assure you of that," Al Hamli told the newspaper. Al Hamli, when asked whether the new policy would take affect in the second half of the year, indicated it would be earlier than that, perhaps in one month or two months, although he couldn’t go into specifics due to the government having to upgrade the immigration laws, which will take a measure of time.

Emirati redundancy case ends amicably

From Arabian Business 3rd March 2009

A group of Emiratis who lost their jobs last month as a result of the global downturn have settled the case.

A group of 20 Emiratis who had filed a complaint with the Ministry of Labour over their redundancy from a private company accepted a financial deal to close the case, it was reported on Tuesday.The former employees of Al Sha'afar General Contracting (ASGC) were offered a month's salary in bonus, after demanding compensation for termination of their contracts in the wake of the global crisis.The complaint and subsequent settlement makes it the first-ever economic crisis linked redundancy case involving Emiratis, according to UAE daily Gulf News.

The case coincided with the introduction of new legal regulations by the UAE government that effectively bans private companies from making job losses among nationals for “flimsy” reasons, including the global crisis.

Introduced on Feb. 18 this year the amendment to the labour laws states that companies must endevour to do everything in their power to retain local employees, and can only terminate a contract with the permission of the Ministry of Labour. Any company must be able to prove that the worker is inefficient or has violated labour laws, the ministry said at the time.

On Monday, Mariam Azmy, human resource director at ASGC, said the ministry had acknowledged that the company's hand had been forced by the global financial downturn, and that the company had not sought to terminate the services of the said group arbitrarly. "We decided to give one month's salary to each one of them as a [token of] appreciation from us and taking into account their financial situation," said Azmy. Ex-employee Mariam Al Baloushi, a mother of four who worked for ASGC for a year, said she was satisfied with the settlement since she wanted to avoid time-consuming court proceedings.

However, Latifa Mohammad, another ex-employee, said "the decision was unfair" since the ministry did not give them desired level of support.

Emirati nationals made redundant - sue their employer

Emiratis allege arbitrary termination of services
From The National: Wafa Issa
Published: February 11, 2009, 22:55

A group of Emiratis, who were made redundant due to the financial downturn, have filed a complaint against their employer at the Ministry of Labour citing arbitrary termination.

More than 20 Emiratis filed a complaint last week against the Al Futtaim Group (Omar not Majed), their former employer, demanding immediate reinstatement and compensation on moral grounds. They also filed a complaint at the Dubai Ruler's court.

A senior official at the Ministry of Labour confirmed that they received the complaint and are looking into it.

Ahmad Ebrahim. a sales executive who has been working for the group since 1998, said the government should issue rules which protect Emiratis' right to keep their jobs under difficult circumstances, especially since they are the minority in the workforce.

"Emiratis should be protected through legislation during such hard times. We should have these rights as UAE citizens. I find it strange that we should lose jobs in our own country," Ebrahim said.

"There were no legitimate reasons to end my services. I have been working for this company for 11 years and always received good feedback in the annual reviews," said Ebrahim, who also demands compensation on moral grounds as he was asked to leave the same day he received the termination letter.

"I felt that I was thrown out. It is so humiliating," he added.

Ahmad Al Naqbi, a salesman at the company for more than a year, said he understands the need for companies to downsize their workforce during the global crisis, but he alleged that in their case, the termination was racially motivated.

"All three Emiratis in the showroom I work at were terminated despite people of other nationalities with less experience keeping their jobs," he claimed.

According to Al Naqbi more than 40 Emiratis have been terminated by the company this month.
However, a spokesperson of Al Futtaim Group claimed they have made about 30 Emiratis redundant out of 450 employees due "to the restructuring of the company in the light of the current global financial crisis."

The spokesperson also claimed that some of the Emiratis, who were laid off, were on probation and were terminated as they did not meet the job requirements. "We are, however, reviewing all the cases with a view to reinstating them in companies within the group," the spokesperson said.
The spokesperson denied allegations that the termination was racially motivated. "We had 700 employees and we only terminated 30. I do not see how this could be racial discrimination," he said.

Made redundant? Think twice about suing your employer

From "The National" newspaper (Abu Dhabi) 25th January 09

Imagine if the IRC started making similar rulings "Filed out of time? You're deported", "Failed to appear? You're deported", "Still wearing the same suit you wore in Court in the 1980s - you are so deported!".

Expatriates who lose their jobs and who want to sue their former employers have been warned to proceed carefully. The Ministry of Interior has told ex-employees that if they fail to adhere to proper legal procedures they could be fined or even deported. It said that disgruntled workers must first take their complaint to the Ministry of Labour. If that fails to resolve the dispute, then they may file a lawsuit with the courts.

However, it stressed that in filing their legal complaint, they had to secure a letter from the court, which they then had to send to both the Department of Naturalisation and Residency and the Ministry of Labour.The letter would confirm they have a legitimate case pending with the court and should be entitled to an extension of their residency visa.Lt Col Rashid al Khadar, the head of the legal affairs department at the Ministry of Interior, said this would allow plaintiffs to remain in the country while awaiting a ruling on their case. Otherwise, they will be considered as being in the country illegally.

Lt Col al Khadar said a worker with a pending case against a former employer could obtain a six-month, temporary work permit from the Ministry of Labour, which could be extended until the court rendered a verdict.He said if a labour case dragged on for several months, the Ministry of Interior could inform the court it did not object to the employee’s visa being transferred to a new sponsor.“As long as they have genuine cases against their employers, they will have the full support of the ministry,” Lt Col al Khadar said.

Typical claims being filed against employers amid the global economic downturn include failure to pay salaries and gratuities, refusal to cancel labour and residence permits, and asking workers to say they had received end-of-service benefits when they had not.Residency permits are linked to employment and foreign workers are given a month to leave the country when their residence and work permits are cancelled or expire.

“There are so many companies in financial trouble who have terminated the services of their employees without giving them their salaries and end-of-service benefits,” said Karunagappally Shamsudeen, an advocate at Al Kabban Advocates and Legal Consultants in Dubai.“Other companies have been sending their workers on a long or extended leave. If they are outside the country for more than six months, they cannot re-enter the country unless they obtain the necessary approval from the immigration authorities.

“I am currently handling 150 labour cases and seven immigration cases. I have a client who has filed a case against his employer. He received a letter from the clinic, which had closed, that his services were no longer required.“He is asking for his salary, gratuity and an additional three-month salary as compensation for arbitrary dismissal.”Mr Shamsudeen warned that laid-off workers had to stay in the country to receive their end-of-service benefits, and said it would be difficult for employees to file a complaint once they had signed visa-cancellation forms, as the forms state they had received all their dues from the employer.

He said he had also handled several cases of employers filing false absconding reports and asking the Ministry of Labour to blacklist their workers.Workers who have bank loans and credit card bills have to settle them before leaving the country, Mr Shamsudeen said, as employers normally notify the banks of contract terminations.Under immigration laws, people holding expired or cancelled residence visas are fined Dh25 a day for the first six months.

The fine doubles for the next six months to Dh50 a day. They are Dh100 a day for those who have overstayed by more than a year.People who have illegally stayed in the country after the expiry of their visit visas face a fine of Dh100 a day. But at any point they can be deported on a case-by-case basis.

Redundancies in Dubai

Things change so quickly in Dubai. Back in August everything was booming, in October the Nakheel Tower, touted as the world’s (latest) highest tower, was unveiled with great fanfare at Dubai Citiscape, but in what seemed like a nanosecond, by November redundancies were being announced in the construction and real estate sectors and the first shivers were felt in the expat community. Since then its been a horrible time, not a week has gone by without news of a friend or acquaintance being made redundant. Your right to reside in the UAE is linked to your employment; UAE residence visas are cancelled once a person’s employment is terminated, the person then having 30 days to leave the UAE. No job=no stay. Often wives and children are included on the husband’s visa so when his visa is cancelled so are theirs. Many companies have given redundant employees a grace period of two to three months to look for alternative work before their visa is cancelled. However, jobs are hard to find with companies across all sectors having frozen employment.
Faced with the realisation that there is little chance of future employment in Dubai, people are searching for work in the other emirates of the UAE or further afield in Qatar, Egypt and Saudi. However, some families are making the decision to leave Dubai and return home. For most this means that household furniture has to be either sold quickly or packed and shipped home. Word on the street is that the removal companies have a 5 week waiting list to give removal quotes, which isn’t much use if your visa expires in 30 days. (Of course you can keep doing visa runs though I guess). There’s also a 4 week delay in getting shipping containers out of the Dubai port. Kids are being pulled out of school, I’ve heard that at one of the large Indian schools with 10,000 students, 3,000 students have already applied for exit certificates.
The redundancies that have been publicised, and no doubt there are many, particularly amongst the labourers that haven’t been released:

Al Futtaim - unspecified number but all construction at DFC including the extension of the Festival City Mall has been put on hold.
Al Shafar General Contracting Company - 1,000
Atkins - 170 from Dubai (10% of their workforce)
Better Homes - 50
Carillion - 400 staff (nearly 20% of their workforce in Dubai)
Casa Dubai - all staff redundant, office closed and company in liquidation. Some investors have paid for what are still holes in the ground.
Damac - 200
Dubai International Capital - a 10th of its staff
Dulsco - 800 in two stages
Gulf First Bank - unspecified number
Gulf Leighton - at least 150
Hyder Consulting - 15
Istithmar World - 13 (doesn’t sound many but its 10% of their workforce)
Mace International - The company has announced that it has reduced its staffing levels as its clients shelve projects it was managing.
Mizin - 50
Nakheel - 500 redundant in November. Trump Tower on hold.
Omniyat - 69
Sama-ECH - 140 (Sama-ECH is the JV of local developer Sama Dubai and UK-based EC Harris)
Tameer - 180
WS Atkins - 170 plus 40 from their Manila office who were working on Dubai projects
WSP - 35
Woods Bagot - "dozens" of jobs had been lost.
Universal Studios - 50. The project was scheduled for completion in 2010, but is “now delayed to the first quarter of 2012 at the very earliest”.(Zawya)
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· "The Arab world has lost 2.5 trillion dollars in the past four months" as a result of the global financial crisis (Kuwaiti Foreign Minister Sheikh Mohammad al-Sabah)
· An average of 1,500 work permits and visas are being canceled in Dubai each day as companies lay off employees in the wake of the global financial crisis. (Arab News)
· 60 percent of development projects "have either been postponed or cancelled" by the six-nation Gulf Cooperation Council (GCC) states because of the global meltdown. (Kuwaiti Foreign Minister Sheikh Mohammad al-Sabah)
· The giant hotel facades on the sides of the highway at Dubailand have disappeared
· Last week, Dubai Police revealed that an alarming number of cars bought on finance were being dumped at airports.
· Carillion has no live building projects in Dubai, only infrastructure projects which are continuing.

The economic tsunami hits the sandy shores of Dubai.

In the past couple of months the world seems to have shifted on its axes (yep, that's the plural of axis). The tsunami that is the world economic downturn has arrived on the sandy shores of the UAE. A couple of weeks ago, the Dubai government announced that it has debts of $80 billion. Abu Dhabi has stepped in with loans to Dubai, but at what cost nobody seems to know, though there are some interesting rumours on the street which involve the future of Emirates Airlines. Several of the major developers here have put what were considered flagship developments "on hold", and redundancies are now happening on a daily basis: 500 people were let go from Nakheel last week, 400 from Emaar, and 70 from the World Trade Centre Real Estate division. There have also been redundancies at Omniyat, Al Ghurair, Damac and Better Homes amongst others.

Meraas has also made a number of staff redundant and their 350 billion dirham Jumeirah Gardens is one of the developments now on the backburner or in CorpSpeak "....we are reviewing...the phasing and roll-out of the Jumeirah Gardens project...". It was the proposed development of Jumeirah Gardens which caused us to be evicted at speed from Satwa by our landlord (Al Ghurair). In the past few months huge sections of Satwa's housing area have been bulldozed and it now seems that those piles of rubble will remain into the foreseeable future as silent monuments to greed gone mad. Still, if the deferral of Jumeirah Gardens means a reprieve for the best Pakistani restaurant in the known universe then its a good thing. Schon Properties developers of the Lagoons have announced they are 'scaling back'. Trump Tower is on hold as of yesterday with resulting redundancies here in Dubai. Australia's largest construction firm Leighton Holdings Group was involved in the building of Trump Tower through its connection with Al Habtoor Engineering. Despite the announcement that Nakheel will cover all Al Habtoor Leighton's costs, Leighton's share price in Australia has dropped 7.3%. All the redundancies referred to are expats but of course the labourers from the sub-continent will be effected immediately too: No work=go home.

The government in the UAE is closed for business for the next 10 days due to Eid so there's no official visa or employment related information available. The websites are no help. I imagine sales of the latest issue of UAE Labour Law at McGrudys have rocketed as a result. There's a growing number of people facing redundancy who can’t find the answers to some very important questions.

1. Once a person is made redundant they and their family have 30 days to leave the country before their visas are cancelled. If they are lucky, they might get 3 months notice period or their employer may hold off cancelling the visa until the employee finds a new job or makes arrangements to move back to their country of origin. 30 days isn't very long to find another job or failing that, organise flights home, pack up a household etc. As the holiday season is close, flights to most Western destination are heavily booked.

2. My understanding is that many of the people being made redundant will also be banned for 6 month from working in UAE. This is a blanket action but the ban can be “bought off” for 1,000 dirhams by the next employer (if there is one…..).

3. How do you get your rent back when its been paid 12 months in advance and you have 30 days to leave the country?

4. Can you get a refund on school fees paid in advance?

5. There is a justifiable fear that the bank accounts of people who’ve been made redundant will be frozen. This happens in Dubai.

6. Will an exit visa system (like that in Saudi) be introduced so no expat resident can leave Dubai unless they can produce a letter from the bank stating that their debts are cleared?
If someone has purchased a property here and, worst case scenario can’t get another job in Dubai, how do they pay the mortgage? Renting is the obvious answer but while rents aren’t going down as yet, the number of renters will fall eventually.

7. What if you’ve bought “off plan” and the development has now been put on hold? In Dubai, the purchaser pays the full price of the unit before they move in, but what if there’s nothing to move into? Residential units in the Lagoons which were initially scheduled for completion by December 2007 are now expected to be ready in 2011.

8. Rumours of increasing numbers of loan defaults are starting to circulate; people who are ‘cutting and running’.

9. As of last week, you cannot get a credit card in Dubai unless you have worked for the same employer for 2 years earning 20,000+ dirhams per month (this from Barclays Bank and confirmed by a contact at HSBC)

10. No loans to lease a car available from any of the banks, strict criteria for loans for vehicle purchase now in place.

I’m no expert and if anyone can help answer any of these questions it’d be appreciated as there are some very worried people searching anxiously for answers.