After major job cuts in 2020, companies are rehiring comparatively more in recent months
Dubai: After major job cuts in 2020, companies are rehiring comparatively more in recent months than last year. But what does this mean for your salaries that have a pandemic-induced cut in place?
When it comes to your existing salaries, which are yet to return fully to pre-pandemic levels, surveys indicate one shouldn’t be eyeing a pay hike this year.
In the nine months since the pandemic struck, there has been a near 25 per cent drop in salaries advertised compared to a year earlier, recruitment tracking portal GulfTalent had revealed recently.
While some job categories saw steeper falls, the study further showed that it is unlikely that employers will be rushing to return salaries back to 2019 levels. Moreover, financial planners see clients making do with their current income, while looking at possibilities of taking on an additional source of income.
COVID-19 has evidently been impacting personal finances, with studies showing that 50 per cent of the UAE population (estimated at 9.9 million) – having faced varying levels of a reduction in primary income – sees the pandemic keeping their income and/or employment pay pressured in the months to come.
Another study had shown that 76 per cent of 25 to 34-year olds in the UAE would set up a second income stream. Moreover, 77 per cent of all 18 to 44-year olds would reskill compared to only 56 per cent of those aged 55 and over.
Young people are particularly confident, with 87 per cent of 18 to 34-year olds in the UAE feeling that they have the digital skills needed to thrive post-COVID-19 compared to 71 per cent of those over 65 years.
However, the question remains is it time to quit your current job, find a part-time job or take on additional skills during this time of the current pandemic crisis.
The opportunity to make more money and lead a better lifestyle has already been driving some UAE residents earlier to take up part-time work without leaving their full-time jobs. Others have been undertaking part-time gigs to pursue a hobby or passion as well as to save extra cash for children’s education or retirement.
However, with pay cuts still in place for jobs in multiple sectors, and signs indicating of further extensions, the situation only drives those earlier on the fence about finding an alternate means of income, to now being compelled and finally resort to taking on additional ways to earn more money.
Additionally, it’s supplementary security in case you lose your primary job as you are still earning something to get you through.
With UAE’s inflation expected to decline by 1.5 per cent year on year in 2020, UAE residents have had more purchasing power today, than in 2015 and 2016 where the high cost of living forced several expatriates, especially Generation Z, to work part time to supplement their income.
Although inflation remained in the negative space, more consumer confidence – as defined by their spending – came back to normal in the December of 2020.
In December, spending in the UAE improved in nine out of the 13 sectors that form the index, which is a statistical method for measuring changes in the price of goods and services.
Spending improved during the month of December on clothing, shoes, supplies, household equipment, transportation services, communications, promotion, culture, education and tobacco, in addition to the restaurants, hotels, and other goods and services.
On the other hand, spending on housing, water, electricity, gas, food and beverages sectors decreased, while spending on health services stabilised.
Even as the cost of living has comparatively reduced in the UAE, with salaries lower, big spenders are resorting to doing part-time work to continue to fund their lifestyles.
Employers are also increasingly hiring more part-time workers and less full-time staffers to optimally manage their operational expenses.
Wages in the UAE have been staying stagnant for quite a while now and with the current pay cuts, a majority of people struggle to meet all their household expenses and they are running out of spare cash.
To help paint a clearer pre-pandemic picture, up to 40 per cent of employees across the UAE have not had a salary increase for two years, as disclosed by a late-2019 study by Tiger Recruitment. The research also found that 71 per cent of survey respondents were not rewarded a bonus in the entire year.
Research shows that while people have successfully juggled two full-time jobs – albeit in comparatively fewer numbers – it is tough, even if it is financially rewarding. When also considering other aspects, apart from your finances, working part-time at your second job is a considerably better option.
To be worth your while, working a second job should provide tangible benefits without jeopardising your main source of income. So there are a few money-related questions you should first ask yourself.
Is it enough money to be worth your while? While a part-time job won’t pay you as much as your primary job, you don’t have to worry about taxes taking a bite out of your pay (which would not amount to much if tax was levied) when living in the UAE.
As the UAE doesn’t incur taxes on your salaries, having a part-time job – even with a nominal pay – is still considered beneficial, as working only a few hours a week can cushion your finances. Moreover, it is an increasingly common practice among several UAE residents.
Considering the non-money factor as well: Will getting a second job offer more than money? Even if you don’t stand to make a ton of cash from a part-time job, there are still reasons to do it anyway.
A low-paying part-time job might be worth the investment if you’ll gain skills or experience that will make you more employable or help you move into a new role or industry.
It can also be worth if it will help you make contacts that could lead to professional opportunities down the line and you’ll have a chance to try out a new role before making a total career change.
With UAE-based recruitment surveys indicating that the service industry is currently hiring more than before, looking for a part-time job in the service industry and visiting employers like restaurants, hotels, resorts, and stores can be a good way to find a second job in those sectors.
While it may be tempting to pick up a second job to help make ends meet, you need to ensure if the extra income is worth it. There are a number of issues to consider when deciding whether to take on a second job.
Tote up all of the expenses of working a second job to see if it’s really worth it. If you have young children, you need to consider the cost of their care while you’re working a second job, apart from transportation and other related costs.
Both the time and the cost of getting to and from your second job must be factored in as well. If your goal is to bring in an extra Dh2,000 a month but you have to spend Dh700 on childcare, Dh100 on transportation, you are only adding Dh1,200 to your budget every month.
If you spend an hour commuting each way for a low-paying job, you will have to decide whether the total amount of time, including the commute, is worth the extra income.
Apart from budgeting for extra fuel and wear and tear on the vehicle, or if you take public transportation – the costs of tickets or passes, there may be other incidental expenses involved, like supplies for the second job that aren’t provided by the employer.
There are indirect costs to working a second job. The ‘opportunity cost’ of working a second job represents what you have to give up to make it work. In other words, what would have been the difference if you had chosen your next best option?
For example, you decide to take a second job for an additional Dh2,000 per week. Let’s say your part-time job may start an hour after you get off work from your main job, so that would mean more money spent on eating out rather than using the time to maybe cooking at home, despite it being a cheaper.
This is an example of how ‘opportunity costs’ can significantly increase your grocery budget and become one of the many costs of working a second job.
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