Living with Salary Cuts

The news coming from the UK, Europe and the US where people are being told to prepare for a ‘tough winter’, is full of localised lockdowns, rising positive numbers and cautious consumer behaviour.

This caution and negativity will naturally affect businesses in the UAE. Whilst the UAE Government is working tirelessly to stabilise the economy, a huge fallout of the global pandemic has hit businesses where it hurts. This has resulted in companies having no choice but to pass the pain onto their workforce through salary cuts.

The UAE press has reported that this will continue into 2021, so how is it affecting the workforce and their families?


Every day we come across messages from contacts who are struggling to cope financially and comprehend their future with ongoing salary cuts. Just last month, many employees who were expecting a return to full pay received notice that their cuts were due to be extended until the end of the year, resulting in the real prospect of some families existing on 50% pay for 9 months.

The knock on effect of these salary cuts is far reaching, unquestionably the uncertainty and stress of managing on such a reduced package will affect a person’s mental health and positivity. See here for how residents have been remaining positive in the face of salary cuts in the UAE.

Take immediate action

Practically speaking though it can influence every part of daily living; from food bills, to rent, to children’s schooling we spoke to one contact about her husband’s salary cut and how they as a family have been affected:

“My husband works in the hospitality industry and therefore was given a salary cut, I work too but my commission based salary has also been impacted by the global pandemic – so we had to take control early on”

By choosing more affordable accommodation and moving their children from a ‘premium’ school to embracing a cheaper learning institution, our contact and her husband have been able to offset the drop in salary without having to eat into precious savings. “I’m not going to say that it has been easy, we are fortunate that our children are old enough and understand the situation and have embraced the changes in a mature way.  We were able to do this because we took action as soon as the cuts were announced and really stripped back our lifestyle straight away – it helps you to realise what is important in life”.

Loosing control

Other families have not been as successful though one contact told us that she “feels like we’re drowning, but a move back to my home country would be impossible at the moment as there are no opportunities there either”.

A picture containing food, fruit, coffee Description automatically generatedAnother cost-saving option taken up by a contact includes home schooling from a UK company. For just AED 25k per year, they receive a full online study package, including face to face tuition with top teachers. The school week has changed to Monday-Friday and the time-zone is affecting the start of the school day, however the annual saving for 2 teenage children amounts to well over AED 100,000. For this family which is currently living on 50% of their previous salary, it is a no-brainer.


The impacts on business

For employers, there are other knock-on effects of a sustained lower salary. One of these includes losing staff to other businesses which are paying full salaries. A further dilemma to consider – does one hire a newcomer on a 50% lower salary to equal existing employees, or pay them the full amount to attract them to join? These are real life examples our clients are asking our advice on.

A picture containing nature, sunset, standing, ocean Description automatically generatedFurthermore, some of our candidates are not only working on a reduced salary, but their team are slowly but surely resigning one by one, leaving the remaining employees under huge pressure to hit deadlines. Morale is very low, working longer hours for less pay, not seeing family. The question is being raised – ‘is it all worth it any more – perhaps it’s time to go home?’

We do not have a simple solution to these problems, however speaking as recruiters, we are seeing many candidates who are seeking new jobs due to the inability to survive on a reduced salary. If companies continue to push employees to their limits, you can expect to lose a vast proportion of your workforce. Therefore our only advice is to think carefully before extending a salary cut and try to boost staff morale.

 

Recent Posts

Sustainability

In April 2021 Inspire Selection launch of our Sustainability desk to support companies to recruit and build their Sustainability teams. Here we investigate what Sustainability means for organisations and why it is so important. We talk to Damian Regan Assurance Leader...

Invisible Jobs: Stay-at-Home Parents and Career Break

What an uplifting conversation with Dina Butti, Najat Abdelhadi and Louise Vine! If you missed the chat on working and parenting, and how the world of recruitment has changed since the pandemic, check it out here: https://www.youtube.com/watch?v=c3iXAQsAAgY

The One-Click Job Search….. it doesn’t work

We recently joined The University of Manachester for their MBA careers event where we were selected to be part of an expert panel and Q&A session. The common thread was that many job seekers find a job online, hit ‘quick apply’ and expect to get the job. The...

News from the Digital and Technical Team

Inspire Selection is delighted to welcome Kiren Gill to the team. With over 7 years’ recruitment experience in Sales, Marketing and Tech roles gained in Dubai and Singapore, and a background in Media, Kiren joins the Technical and Digital recruitment team. “I have a...

Stand out in a competitive marketplace with personal PR

Six seconds is the average time employers spend reading a CV. And during these competitive times, ticking all the boxes your previous job required is far from enough. People are seeking more value - whether it’s from brands on social media or from an employee in the...

Inspire Selection launches a Sustainability Division

Inspire Selection is delighted to welcome Alexandra Scholes who will be setting up a new business line looking at roles within Sustainability. “The world is fast acknowledging its responsibility for the environment and preserving the ecosystem we live in. With the...

Ten Top Tips for a Successful Video Job Interview

CONGRATULATIONS! You have an interview! We understand that interviews can be stressful at the best of times, but the switch away from face-to-face interviews to those conducted by applications such as Zoom and Microsoft Teams throws up more challenges (for generic...

Survey Results – Will job seekers drop their salary?

We are seeing a regional trend of jobs being offered to market at lower salaries than ever before and overall packages being squeezed. We recently ran a survey asking our vast LinkedIn network whether they would take a salary cut. ***A quick note here about Inspire...

Why relaxing your requirements can help you find the perfect hire

You have been trying to fill a role for a long time, but no one is quite hitting the mark, could it be that you are being too narrow with your requirements? We find it is very much a Middle Eastern issue, as brand new candidates from overseas coming into the region...

Career Development Training

You’ve decided that you want to start a new career, or perhaps you’ve been looking for a while but that perfect opportunity hasn’t arisen yet.  Perhaps you are between jobs and you now have time to improve and develop on your career/life skills. Now is the ideal time...