Dubai: As many as three out of every four Saudi Arabian companies expect to freeze hiring over the next two quarters because of a slowdown in the world’s top oil exporter’s economy, a bank survey has said.
“As the slowdown in the economy is unfolding we are not surprised with 74% of the respondents who expect over the next two quarters to institute a hiring freeze,” a report by SABB, HSBC’s Saudi affiliate, said in a quarterly survey of 765 companies.
“It is evident that the labour market is no longer facing a dearth of skilled workforce,” it added.
The percentage of respondents expecting business growth over the next two quarters has fallen to 42%, down from 54% in the fourth quarter and below half its level in the third quarter of 2008.
Only a quarter of respondents reported a rise in production capacity.
Saudi Arabia has so far suffered less from the repercussions of the global financial crisis compared with some Gulf Arab countries, but since it has the largest population in the region, the kingdom faces a bigger challenge in meeting growing job demands from its native population.
According to the report, majority of businesses expect overall business and revenue growth to plateau in the next two quarters.
“Businesses are expecting bank lending to weaken further and 32% of survey respondents expect bank lending to be “not so severe” and 27% expect bank facilities to be “severe”, it said.
The report says labour market seems to be on a general hiring freeze or witnessing some layoffs, which businesses are reluctant to record.
“This is quite telling about private-sector expectations, given that the non-oil private sector grew at 4.3% year-on-year during one of Saudi Arabia’s highest level of budgetary overspending,” said the report.