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Labor woes in the Middle East, Part II

Labor woes in the Middle East, Part II

The global credit crisis is ripping through economies in the Middle East, forcing companies to announce hefty job cuts. Nowhere, not even the Gulf, has been spared.

December 15, 2008 6:20 by

Partly because of the lead that Gulf states are expected to take on their economies moving forward, Standard Chartered Bank predicts economies will continue to grow by 2.7 percent next year, compared to 5.2 percent for 2007 and an estimated 4.8 percent for this year. “We are calling a slow-down, not a recession. This region will still be an out-performer. Businesses will still grow and need staff,” Maratheftis says. He believes spending on advertising and IT will remain high, although corporate hospitality budgets may be cut.

Gulf states have much less of a price to pay than Egypt or Morocco if its firms shed staff. In the Emirates, for example, eight out of 10 residents are hired from abroad. If they’re laid off, they must go back to their home countries. Still, employers here are reluctant to send staff packing, even in sectors, like tourism, which will suffer from the European downturn.

Forty percent of occupants in the United Arab Emirates’ four- and five-star hotels are Western Europeans. Sixty-five percent of them are leisure travelers paying from their own pockets, and the managers are expecting a dip in demand in the New Year. Cost-cutting is the obvious means of propping up profits.

But Patrick Antaki, the general manager of Le Meridien Aqah Beach Resort, says he will not lay off frontline staff. “People here want to be pampered,” he says. “If we get rid of half the staff who serve them, what’s to distinguish us from a three-star hotel?

I don’t think our customers will like it.”

Instead, his answer is to strip out those costs which crept up, almost unnoticed, during the boom years – the costs of senior managers. They won’t have such a ball at the company’s expense any longer. “In the good years,” he says, “the directors might decide to fly to the Far East for a travel conference and everybody would agree it was a good business move. They might also fly business class and stay in a five-star hotel. Now, we’d be flying economy and staying somewhere cheaper. There are costs which you thought were justifiable then, which can be pruned now.”

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