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You just can’t get the staff: firms in race to meet demand

The rate of job creation in the UAE has been insufficient to avoid constraints on business capacity Creative Commons
The rate of job creation in the UAE has been insufficient to avoid constraints on business capacity
  • Job site found 75% of UAE companies to expand workforce
  • Rising wage bills likely to add pressure on already tight profit margins

Businesses in the United Arab Emirates’ non-oil sector are struggling to recruit enough staff to keep up with rising demand.

The latest monthly S&P Global UAE Purchasing Managers’ Index (PMI) reported that business activity was at a five-month high in May.

“The rate of job creation was the fastest seen for seven months but was notably insufficient to avoid constraints on business capacity,” the S&P Global report said.

“Indeed, the solid rise in new orders led to a sharp uptick in backlogs of work that was the most marked since September 2021.”

Trefor Murphy, CEO of Dubai-based recruitment firm Copper Fitch, told AGBI this is a trend they have observed for the last few months.

“I don’t think it’s just this month [but] it is definitely becoming more acute,” he said.

“We’ve been seeing better than post-coronavirus numbers in job creation for the last three quarters, predominantly in the non-oil sector, where most of the growth has been for a very long time, probably about three years.”

Murphy added that the last quarter has also seen a rise in oil sector recruitment as energy companies look to take advantage of the higher oil price.

Previous PMI reports observed that order levels were rising but staff numbers had not grown in parallel, something which appears to have changed in May.

Companies had been saying for some time that they plan to increase staffing numbers.

In February, a survey of 1,481 UAE businesses by the online job portal found that around three-quarters of respondents said they plan to expand their workforce in 2022, with 46 percent planning up to five new hires and a fifth aiming to recruit up to ten new employees.

In September last year global e-commerce giant Amazon announced it planned to create 1,500 direct and indirect jobs in the UAE as it increased its footprint in the country.

Rival, whose backers include Saudi Arabia’s sovereign wealth fund and Emirati business tycoon Mohamed Alabbar, also announced last year it plans to invest $1 billion expanding its operations.

Amazon and Noon both declined to comment on their current staffing and order backlog levels when contacted.

Rising wage bills are also likely to put added pressure on UAE businesses’ already tight profit margins as the latest PMI also reported that costs for items such as fuel, metals, chemicals and energy were at their highest for three-and-a-half years.

With competition in the market still high most respondents to May’s PMI said they were continuing to absorb the extra costs and were not planning to increase prices for consumers.

“Following the global trend, the main headwind to the non-oil sector in May was inflation,” David Owen, Economist at S&P Global Market Intelligence, said.

“Input costs rose at the quickest rate since November 2018. For now, PMI data suggest that companies are choosing to absorb extra costs rather than pass them onto customers but this is unlikely to continue indefinitely.”

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