The Impact of COVID 19 in the UAE Economy
The outbreak of the COVID 19 pandemic has turned the global economy upside down. Dubai, which has one of the most diversified and non-oil dependent economies in the Gulf, relies on sectors like hospitality, tourism, entertainment, logistics, property and retail. Full and partial city-lockdown measures have brought demand in key markets to a standstill. Like many other countries, the Coronavirus had crashed down the economy of the United Arab Emirates. Covid-19 measures had a cowing effect on travel, trade, and business activity. In general, it severely impacted the UAE’s non-oil economy, which accounts for around 80 per cent of its overall GDP.
Many businesses faced with paying salaries amidst the general slowdown have resorted to layoffs after orders started getting cancelled â€“ both from clients and suppliers. Retail outlets, restaurants, shopping malls and hotels had very few consumers coming even after the lockdown. Therefore these business sectors had a huge downfall in their sales, which led to cost-cutting.
Employers were forced to cut more jobs to help their respective companies stay afloat during the latest crisis; many companies are now reaching out to banks to address immediate liquidity problems. This includes requests for more loans to pay employees’ final settlement. With employees heavily reliant on their monthly salary for a living, it was extremely hard to meet their daily living expenses.
Many started thinking of how to move on from a pay cut or job loss during the Covid-19 crisis. In the UAE, after a strict lockdown in April, economic activity is resuming as part of a phased approach, with hotels, retailers and sports providers returning to business. However, many residents have already been affected financially. In a Mercer survey conducted in 2020 across the GCC, 27 per cent of organizations stated they had made cuts to employees’ pay in the region. Some companies have continued to implement permanent salary cuts now as well.
Are you also suffering from pay cuts and unemployment?
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