Kuwait Employment and Career News
Kuwait financial sector witnesses major job redundancies and salary cuts
The financial sector in Kuwait is witnessing several job layoffs and lesser salaries, as the banks and investment firms try to tackle the global economic crisis.
One of the employees of a major banking group in Kuwait said that her bank no longer recruits people. Certain departments are closed and those employees are being shifted to other departments. Although, the layoffs are most likely for those who have received warnings, there is extreme fear among all the staff.
About 12,000 employees are currently working in banking sector alone, majority of them being Kuwaitis. Several thousands of expatriates and citizens work in investment sector too. Although majority of layoffs in the banking sector involves expatriates, when it comes to investment sector, both citizens and expats face downsizing, with the worsening of the crisis.
The leading trade union in Kuwait has criticized private sector firms for layoffs and salary reductions. The President of Kuwait Trade Union Federation, Khaled Al-Azmi, has warned that reduction of salaries of employees is against the Private Sector Law, and those involved shall be punished, as the problem arises due to greed of company owners.
The investment firms in Kuwait too are downsizing their staff and restructuring salaries. All other incentives too have been either reduced or cancelled. About 46 of listed investment firms in Kuwait have noticed that their share prices have reduced by half, ever since the crisis hit Kuwait in October.
According to financial analysts, rather than diversifying their portfolio, the investment companies invested all their assets in KSE (Kuwait Stock Exchange), and hence when the market fell, their businesses fell with it.
Several investment firms will be forced to merge with other companies or face bankruptcy. While 70 percent of these companies no longer meets the necessary criteria for being listed on the bourse.
As explained by a financial analyst in Kuwait, one of the article in the KSE states that for being listed on the bourse, the company should have achieved net profit in the last two fiscal years, and the yearly net profit should not be less than 7.5 percent of the total average of paid-up capital at the end of each fiscal year. Also, the companies would require a capital of KD10mn to be registered.
However, a majority of these companies cannot guarantee to make a net profit of 7.5% next year, the analyst points out.
Last week, Parliamentarian Mohammad Al Abduljader had warned that about 27000 nationals employed in private sector are likely to face termination, and sought immediate government intervention into the problem.
The citizens who are made redundant can atleast hope for government support, but expatriates would be compelled to leave Kuwait in case they cannot find another job within a month after cancellations of their work visas.
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