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Wednesday, May 12, 2021

Government agencies announce budget cuts amid COVID-19 pandemic

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by Sara Abadi

iStock

A circular issued by the Ministry of Finance has been doing the rounds on social media and Whatsapp groups across Qatar. The document details the directives handed to all state institutions. In it, it says that all government entities must slash their budget for non-Qatari wages by 30%. It gives each institution the freedom to do that at its own discretion, meaning some may let 30% of their foreign work-force go, whilst others may reduce their salaries or offload fewer number of expats with higher salaries.

The budget-cut guidelines aren’t limited to the non-Qatari workforce, according to the circular, all government bodies must also cease paying certain benefits to Qatari employees such as holiday allowance and put a freeze on appraisal-based pay-rises. It’s all part of the government’s attempt to weather the economic storm created by COVID-19.

“Drastic as they seem, the measures, are temporary and will be re-assessed periodically”, a source at the Ministry of Finance told Doha News. While the 30% target figure is mandatory, each entity has discretion over how they decide to implement the budget cuts, whether it be pay cuts or letting go off staff altogether.

These particular budget cuts only apply to entities that are 100% government owned. Meanwhile, semi-government owned entities such as Qatar Airways, Qatar Petroleum and Al Jazeera Media Corporation have taken their own measures to combat the economic crisis. Qatar Airways has laid off around a third of its workforce and the airline has also asked its Qatari staff to take a voluntary pay cut to help it get through this period, a source told Doha News.


Circular issued by Ministry of Finance announcing budget cuts.

Details of Qatar’s budget cuts came as neighbouring countries UAE and Kuwait both announced significant cuts to their expat population. The countries’ budgets have taken a hit because of falling oil prices due to Saudi Arabia’s price-war with Russia and the coronavirus pandemic.

Kuwait’s prime minister said the country’s expatriate population should be more than halved to 30% of its current total, and the Kuwait News Agency reported that non-Kuwaiti nationals will no longer be hired by the country’s oil industry.

According to Oxford Economics, United Arab Emirates could lose 900,000 jobs. UAE also announced on March 26 that private sector businesses can send their employees on paid or unpaid leave. The decision also states that business houses can reduce their staff strength but that those staff should be registered in the ministry’s virtual job.

The measures could result in a significant decline in the expat population in Qatar, and other GCC countries, and could also have an adverse impact on the other sectors due to labour shortage.

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