Streamlining not emiratization responsible for wide-scale UAE bank layoffs
Recent layoffs in the UAE's banking sector have been the result of a natural streamlining of operations, and are not related to the emiratization process, as many had believed, reported Gulf News
UAE banks are currently in the process of reviewing their operations and re-engineering their practices to survive in a globally competitive environment. Higher costs have affected banks' profits since 1996, and came in part as a result of investments in branch expansion, IT upgrades and ventures into Internet banking.
It is against this background that employee costs, which comprise between 30 to 40 percent of overall operating costs, are being reviewed. This phenomenon is not restricted to the UAE but has become a global banking trend, commentators note.
According to an industry source, expatriate employees in the UAE feel particularly vulnerable, due to the belief that recent layoffs are related to emiratization requirements. According to federal guidelines, banks have since 1999 been compelled to raise the number of locals on their payroll by 4 percent annually for a 10-year period.
Concerns of major layoffs at UAE-based banks first became apparent in the first quarter of the year, but these were limited to IT departments, and particularly Y2K task forces. During the second quarter, however, job cuts became more br oad-based. Emirates Bank International (EBI) announced in June that it was eliminating roughly 10 percent of its 1,300 local employees due to slow market conditions and heavy investment in branch automation. The cuts have affected workers in all levels, from entry-level positions to mid-management and senior personnel. – (Albawaba-MEBG)
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