Gulf nations slash state jobs as economies hit by low cost of oil
Print Edition
THOUSANDS of layoffs at state-linked companies in Abu Dhabi are a fresh sign that the Gulf’s wealthy oil states are hunkering down for a long period of austerity as low crude prices pressure their economies.
Since mid-2015, the United Arab Emirates (UAE), Saudi Arabia, Qatar and other countries in the region have curbed spending on construction projects and cut energy subsidies to limit budget deficits caused by cheap oil.
Now governments are also starting to reduce staff at the companies they control, many of them in the energy industry, in order to ensure the firms are not a drain on state finances if oil prices stay low for several years.
Abu Dhabi’s National Oil Co, with about 55,000 employees, has cut hundreds of jobs in recent months and will have reduced its workforce by 5,000 by the end of the year, according to sources familiar with the matter.
The cuts will be across most of its 17 subsidiaries as part of a restructuring following a leadership reshuffle this month, they said.
An ADNOC spokesman did not confirm or deny the cuts but said: “In keeping with the entire oil and gas industry, ADNOC is constantly looking at ways to be more efficient and more profitable.”
The UAE’s oil and gas recruitment market is set for its most difficult year in over a decade, recruiters Morgan McKinley said.
“The oil and gas industry is still feeling the pain, as was to be expected. Overall redundancies have been on the increase,” said Trefor Murphy, managing director for the region.
Most layoffs at Abu Dhabi state firms are not in response to production cut-backs; the UAE has not reduced its oil output, and said it is proceeding with long-planned oil and gas development projects.
Nor do the layoffs mean Abu Dhabi is running out of money.
With hundreds of billions of dollars in its sovereign wealth fund, the emirate could draw down its reserves to sustain current levels of spending for decades. But the government wants to minimize the speed of the draw-down as it looks ahead to the possibility of many years of low oil prices.
Last year, Abu Dhabi acted ahead of other Gulf states in cutting domestic fuel and electricity subsidies. Now it is applying the same approach to state-linked firms.
In Qatar, state-controlled firms such as Qatar Petroleum and Qatar Rail have been laying off staff. Companies in other states such as Saudi Arabia and Oman have also been looking at ways to reduce costs but so far not resorted to major job cuts.
Most cuts at state firms in Abu Dhabi and elsewhere involve foreign staff rather than locals, because governments want to limit unemployment among their citizens.
Companies cutting workers include Abu Dhabi National Energy Co, which has reduced its workforce by a quarter since 2014.
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