Dubai’s rapid expansion in recent years provided jobs for millions. But the global financial meltdown has abruptly ended the dream for many people as more and more firms sack staff to cut costs.
Spectacular economic growth, spurred by a robust construction sector, lured people from far and wide to the booming city on the shores of the Gulf, tempted by high pay, low tax and — for many Europeans — the year-round sunshine.
Foreigners form most of the population in Dubai and with residency permits linked to employment many of the people who are losing their jobs face the added upheaval of leaving the country.
“I don’t feel that I was wronged. This is business ... But I would have preferred a cut in my salary rather than being sacked,” said an Arab man who was let go by government-controlled property group Nakheel.
Another former Nakheel employee: “Only four days before we were given the termination letter, our director told us in a meeting that the situation was very difficult and that the budget for our project had been cut by nearly three-quarters.”
“It was too quick,” said the 30-year-old employee who was sacked at the end of November as one of 500 employees — 15 percent of the workforce — who lost their jobs.
Nakheel has its fingerprints on most of Dubai’s iconic projects, including three palm-shaped artificial islands and a cluster of islands in the shape of a world map.
In early October it unveiled another gigantic project to erect a 1km high tower, which, if ever built, would dwarf the unfinished Burj Dubai, currently standing around 700m high.
“We have the responsibility to adjust our short-term business plans to accommodate the current global environment,” said a Nakheel statement announcing the redundancies, which it described as “regrettable, but a necessity dictated by operational requirements.”
Property sold like hot cakes for the past few years but demand has slumped amid the global credit crunch as panicking investors and creditors fled the market.
All of sudden, the viability of the grandiose property projects has become questionable.
Nakheel’s job cuts program is one of the largest so far in the United Arab Emirates (UAE), but is far from the only one.
Damac Properties, Dubai’s largest private property developer, cut 200 jobs, or 2.5 percent of its workforce, in October.
“We’d been growing in sales by 100 percent a year, but it is not the same now. If the market gets worse, we will have to let more people go,” Damac chairman Hussein Sajwani said this month.
Al-Shafar General Contracting said a few days ago it was laying off up to 1,000 workers as its order book has dropped by 3 billion dirhams (US$817 million) since September.
Emaar, the other local property giant, said recently that it was revising its recruitment strategy and reportedly laid off 100 workers last month.
Omniyat has shed 69 jobs out a 350-strong workforce and Tameer reportedly notified 180 employees that Dec. 31 would be their last working day.
The job losses have spread beyond property jobs to the financial sector. Shuaa Capital investment bank, for instance, has cut 21 jobs, or 9 percent of its manpower.
Companies in Dubai and the rest of the United Arab Emirates were until recently on a hiring spree. Some 640,000 work permits for foreigners were issued in the first quarter of this year, 306,000 in Dubai alone, a study published last week showed.