Qatar told government-funded entities to cut spending on non-Qatari staffers’ wages as it tries to shore up its finances to cope with the impact of the coronavirus pandemic.
The Ministry of Finance instructed government ministries, institutions and entities funded by the state to reduce monthly costs for non-Qatari employees by 30% from June 1, either by cutting salaries or laying off workers with a two-month notice, according to a letter seen by Bloomberg.
Declines in energy prices have dented Gulf states’ coffers just as local economies struggle under pandemic-driven lockdowns. Most are bridging the gap with a combination of spending cuts and debt issuance. Qatar, which is due to host the 2022 soccer World Cup, raised $10 billion in debt in April.
In introducing cuts targeting foreign workers or support programs that exclude them, Qatar is joining its neighbours from Oman to the United Arab Emirates. Meanwhile, Kuwait’s prime minister said the country’s expatriate population should be more than halved to 30% of the total.
At the same time, cutting jobs and salaries for foreigners could threaten Qatar’s economic growth by raising the risk of labour shortages and hurting consumer spending. Foreigners constitute 95% of the total workforce.
Oxford Economics predicted Qatar could see roughly 10% of its population depart, an exodus that “could have longer-lasting implications.”
Thousands of foreigners work for state-backed carrier Qatar Airways, which employed almost 47,000 people as of March 31, 2019. Expats also make up a large part of the workforce at Qatar Petroleum and its government-backed subsidiaries and affiliates. Both have already announced job cuts.
In addition to slashing budgets for foreigners’ pay, the Finance Ministry additionally halted certain benefits, some of which also affected non-Qatari staff. It ordered a halt to promotions and cash allowances for staff in lieu of vacations and tickets unless they are granted at the beginning of the end of their employment period. It also halted advance payments, except for marriages.