According to the UAE Ministerial of Resolution No 279 of 2020 concerning employees’ stability in establishment of the private sector related to the COVID–19, employers has the right to reduce employees’ salaries. The provisions of this resolution shall be applicable to non-national employees during the mentioned period of applying precautionary measures.
Due to the current COVID-19‘s impact on economy especially small business (companies with employees less than 20), some of UAE residence has faced cut salary between 35-80% till July 2020 as companies need to reevaluate the situation after.
Most businesses in Arab Gulf countries, have already opted for reduction in base salaries and benefits foe 3-4 months after COVID-19 struck these economies and with possible extensions.
Hotels, restaurants, small business, and airlines are the most effected sectors as per survey carried by Dubai Chamber due to stopping of tourism industry.
Engineering, real estate and construction sectors 90 % has reported acting across one of two of their employee benefits.
As per Bloomberg, Emirates airlines has extended 50% cut in salaries till September 2020 as Dubai based carrier steps up measures to preserve cash, according to internal memo. The basic salary reduction took place on April 1st ,2020. Similarly, Abu Dhabi ‘s Etihad airways has extended the salary’s cut with 25% for junior staff, cabin crew and 50% for employees at manager level and above until September 2020. According to CNBC 70% of Dubai companies are expected to go out.
Selective hiring is still taking place in GCC countries however business will have a better reading of perspective and staff requirements over the next few weeks. However, job seekers should be prepared to 15-20 per cent salary cut in salary expectations. More sectors are expecting to have a better understanding to what their staff skills should be and if their own staff can be enough for the coming period or they may concern few hires.
As a Business consultant and a resident in the UAE, I have to deal and live by this “new normal” as is a clear fact that most companies are striving to survive this storm by one thing in mind; “Cutting cost”.
It is no brainer that cutting employees’ salaries or even laying them off will contribute to a considerable cut in cost in the immediate short term, and most companies realize that they have to take extreme actions to do so. Especially in this turbulent global economic predicament, business owners cannot afford to be “overweight” anymore, and there is an urgent need to become “fit and lean” for business to struggle in the field.
A lot of companies have turned to the modern workplace, working from anywhere without the actual need for an office building. Employers have replaced the cost of rent and utilities with the cost of laptops and decent internet connections.
Despite the paradox, but studies have shown that investing in a decent digital marketing activity- which is not necessarily expensive- has a considerable return on investment.
Letting go of the usual and unneeded personal expenses, transportation, etc. and remember to make the best use of your current resources.
Over the years, companies have found a lot of weird and wonderful ways to cut costs, companies like yahoo, Cisco and American Airlines and many more have taken out-of-the-box decisions that actually resulted in a tangible reduction in cost. People in American Airlines have managed to save 40,000$ to 100,000$ by removing a single olive in salads served in their flights.
My role as a business consultant in Pinnacle is using science, experience, creativity, strategic metric systems and tools to assist companies to reduce their cost without affecting their productivity and boost the overall performance.
Pinnacle understands the current situation and the challenges that are facing organizations in the Gulf and based on this understanding, Pinnacle has developed services and job aids to assist in such tough times facing off the extreme measures:
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Pinnacle is a multi-country consultancy firm. Our consultants are spread around the world; with 70% of our consultants are women. We have built our organization on modern business model with agility, diversity, and resilience to the business dynamics. We have chosen our technology platform to support our modern mindset thus we work from anywhere.
As work is not a place anymore. We implement Lean Six Sigma in everything we do whether internally or externally at our client sites.