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According to recruitment industry executives, there are "no systemic permanent layoffs" occurring in the UAE as companies regard the ongoing military conflict in the region as a temporary situation.

Businesses in the UAE and the Gulf region are encouraging employees to utilize their accrued leave rather than resorting to permanent layoffs. This approach reflects a desire among business leaders to manage costs responsibly while safeguarding the long-term interests of their organizations in light of the current US-Israel-Iran conflict.

“It’s been a little over one month since the regional issues started. So far, we haven’t seen any trend of systematic permanent layoffs. This is a good sign and signals positive sentiment in the employers’ market about what the future holds. The steps taken by companies tend to indicate that almost all employers presently see this conflict as a temporary issue lasting a few weeks or months, creating momentary pressure on revenues and profitability rather than a long-term decline,” said Mohammad Osama, CEO of GRG, in an interview with Khaleej Times.

A systemic layoff refers to a widespread and planned reduction in the workforce that is integrated into an organization’s structure or operational strategy.

On Tuesday, Danube Group announced that it would not lay off any employees. “We will not lay off any employees at Danube Group. All salaries will be paid on time. Our 6,000-plus employees are not just our workforce; they are our family,” stated Rizwan Sajan, founder and chairman of Danube Group.

Sanjeev Giri, head of operations at Adecco UAE, mentioned that it is natural for employees to be concerned about potential layoffs, salary adjustments, or cost-containment measures given the challenging market conditions.

“Yet the broader picture of the UAE labour market tells a more reassuring story – one of continued growth, adaptability, and forward-looking workforce strategies,” he explained, emphasizing that the key question facing business leaders is not just how to cut costs, but how to do so responsibly while safeguarding long-term organizational capability.

He pointed out that companies recognize talent as a valuable asset that requires significant time and investment to develop. “Losing experienced employees during temporary downturns can create larger challenges when markets recover. As a result, organizations are adopting more flexible workforce strategies.”

Unpaid Leave and Salary Cuts

Giri noted that some sectors respond more swiftly to changes in demand or operational pressures. Industries such as aviation services, retail, logistics, and energy-related services often make early adjustments during market fluctuations. For companies in these sectors, workforce planning is a critical balancing act.

Sanjeev Giri elaborated that common strategies include offering voluntary unpaid leave options, temporarily reassigning employees to different projects, adjusting work schedules, or slowing down new hiring while ensuring existing teams are protected. These measures help organizations navigate short-term financial pressures while maintaining workforce stability.

Mohammad Osama indicated that the measures taken can differ significantly between industries and markets. “For example, in Saudi Arabia, especially for companies in the Western Province, we haven’t seen any impact whatsoever. Similarly, in the technology sector, companies are continuing their projects with little to no disruption.”

He added that the most extreme cases are found in the hospitality industry, where some staff have been asked to take unpaid leave until conditions improve. Other measures have included temporary salary reductions of up to 30 percent.

“However, in many other industries that haven’t faced significant impacts, business continues as usual. Some measures taken have included reduced spending on staff entertainment, business travel expenses, and, in some cases, non-essential marketing and PR,” he added.

Encouraging Use of Accrued Leave

Mohammad Osama also mentioned that certain companies are encouraging employees to use their accrued leave. “This has been seen in most companies, particularly where employees have opted to travel outside the UAE due to the current situation. While many companies have allowed their staff to work from home in Dubai, they have been more hesitant to permit remote work from abroad for various reasons, including time zone differences and access to essential connectivity tools,” he explained.

Additionally, firms with diversified business units are reallocating key staff and high-performing employees to other projects. Giri confirmed that companies are indeed encouraging employees to take their accrued annual leave.

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