In recent weeks, we have witnessed a significant shift in the global workflow as millions of people currently work from their homes due to self-quarantines and government curfews. This drastic shift has a devastating impact on the labor market, which remains the main challenge for the barely recovering global economy.
In the US alone, it is estimated that more than 25 million workers will lose their jobs in 2020. Still, even with the ongoing efforts from governments and the financial sector, many commercial clusters like the EU and the GCC may need to devise comprehensive strategies to avoid an economic downfall.
In the GCC, the Twin Crises has imposed a new set of challenges, affairs like Russia and Saudi Arabia’s economic war over oil production volume and barrel price, are exposing fundamental financial aspects as either obsolete or in need of immediate amendment.
Government support is essential at this point, as private sector giants like Aramco seek immediate government aid. But how would governments support the economy while adjusting the unexpected effects of the 2020 disease?
The answer to that question is yet to be found, but as job markets across the world experience shifts in process and method, the GCC is navigating what seems to be a disastrous first quarter of 2020. Or what economic experts are calling “the new 2008.”
Measures were taken by the GCC and their outcomes
Government Support and New Regulations
The GCC economy is heavily reliant on foreign workers (expatriates) both for their experience and as sources of revenue. However, for the past four years, there has been a visible shift towards empowering citizen workforces with new regulations and taxes imposed on expatriates only.
In the current crisis, many governments should review their workforce policies to ensure the population’s safety and livelihood.
The UAE, for example, has enacted new regulations concerning “redundant” workforce housing situations and working permit transfer possibilities. However, companies will hold the right to reduce salaries and force employees to take paid and unpaid leaves.
Saudi Arabia will support citizen workers (including small & medium businesses). While no support for the foreign workforce has been announced.
Health Care and Entrepreneurship support
Start-up, small, and medium businesses have become pillars of the GCC’s economy, especially in the UAE. And while stimulus packages are supporting, the fiscal policies of the UAE and Saudi Arabia will tremendously suffer due to the declining consumption rates.
Simultaneously, and on a larger scale, the health care system is facing an expected increase in demand and a drop in insured cases. At the same time, state-owned and state-related entities require immediate support to avoid massive waves of layoffs.
Social Impact and Demand
With the quick spread of the virus, states have implemented travel bans and closed off air traffic rather suddenly, leaving millions of expatriates no way of returning home. This new mobility limitation will increase the demand for consumer goods and services sharply while the global import and export sector struggles.
The Government of Dubai is taking measures to ease the economic effects on industries like hospitality, airline, and retail. While major national banks like Abu Dhabi Commercial Bank (ADCB) will not be cutting jobs in 2020.
While necessary, health measures are becoming a challenge for an already struggling global economy, leaving many on the verge of losing employment. And expatriate-reliant economies are facing a more significant problem; the balance of sudden unemployment and the international oil crises.
By Natalie Al Asad
The views/opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Al Bawaba Business or its affiliates.