ME may witness big drop in employment: Report

Manama : Middle East will be having difficult years ahead with dropping business confidence and downturn in employment opportunities according to the latest report by the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA). 

Global-economic-condition-survey report for first quarter, 2016 released yesterday, says that global business and employment scene will be tough, with Middle East being one of the most affected regions.

The report notes that, globally, more than half of firms are either cutting or freezing employment, while only 14 per cent are increasing investment in staff. “Almost half of businesses reported a drop in income in Q1. As a result, every region except North America saw a jump in the number of businesses cutting capital expenditure. With emerging economies continuing to struggle with low commodity prices and many businesses on a spending lock down, the outlook for the global economy is becoming increasingly gloomy,” it says.

“The Middle East is still coming to terms with the reality of permanently lower oil prices. Business confidence fell to a record low in Q1, with 59pc of firms reporting that they had become less optimistic about their prospects in Q1, compared with a global average of 48pc, and 45pc of businesses reporting that falling revenue is a problem.”

Sixty-Seven pc of Saudi firms who participated in the survey said that they have become less optimistic regarding their economic prospects. 

The companies in the region expect big spending-cut by governments in the next five years, even though the region’s governments have better finances than most commodity-reliant economies.

The survey conducted among ACCA and IMA members had more than 1200 respondents including more than 100 CFOs, according to the publishers of the report. Nearly half the respondents were from small and medium enterprises, with the rest working for large firms of more than 250 employees.

Businesses in the region also faces worries about payment-on-time from their customers, and more than 30pc of them are worried about potential non-payment due to closing down of clients’ business operations.