Wealthy Qataris feeling the pinch

Sunday 04/09/2016
Cars at a petrol station in Doha, Qatar.

Doha - Fly economy class, share an office, cancel journal subscriptions: These are some of the requests put to government employees in Qatar as low energy prices force austerity even among the world’s wealthiest citizens.
With huge offshore gas reserves, a small population and billions of dollars of foreign assets, Qatar has weathered the global oil price slump since mid-2014 better than many of its Gulf Arab neighbours.
However, the decline in state en­ergy income comes when Doha is pursuing a $200 billion infrastruc­ture upgrade for the 2022 FIFA World Cup and building ports and hospitals, squeezing finances and leading to budget cuts.
The foreign workers who make up the bulk of Qatar’s population of 2.3 million have borne the brunt of cutbacks; thousands have lost their jobs as the government has sought to shield its citizens from the ef­fects of austerity.
Still, the world’s top liquefied natural gas exporter faces a $12.8 billion budget deficit this year, its first deficit in more than a decade, and has halved forecasts for eco­nomic growth.
Now, even the 300,000 citizens of the world’s richest country per citizen are feeling the pinch in a shake-up of state entities, which employ about 90% of Qatari work­ers.
“Your responsibility in light of the falling oil prices is bigger,” Qatar’s Emir Sheikh Tamim bin Hamad al- Thani said in a November speech that warned against “waste and ex­travagance”. He said the state could no longer “provide for everything” as the country diversifies its econo­my away from oil and gas.
The austerity measures may be light compared with those felt by expatriate workers and poorer energy-producing countries but they have unnerved some locals for whom affluence and stellar eco­nomic growth have been the norm.
A merger of several ministries this year did not affect the Qataris’ salaries or benefits, which are still viewed as sacrosanct but did en­tail sharp cuts in “discretionary” spending, according to three gov­ernment ministry officials.
“We stopped receiving a daily pa­per,” said one of the officials, who said colleagues had been encour­aged not to fly business class and to cut back on trips to overseas confer­ences.
An official from the Labour Min­istry said as a result of the merger hundreds of Qatari government employees had been left with no work since January as the govern­ment scrambled to find them new positions while continuing to pay their salaries.
Labour Ministry staff members were told that travelling abroad for further education while working for the government — an appealing aspect of the job for many Qataris — was being limited to those pursuing technical or vocational degrees, the official said.
Qatari authorities said the oil price slump provides an opportu­nity to curb the excesses of gov­ernment agencies that have been plagued by inefficiencies for years.
An economic adviser to the gov­ernment, who also asked to remain anonymous, said there was a freeze on recruitment in some govern­ment departments and more scru­tiny on spending. He said reducing inefficiencies, while painful, would benefit the state in the long run, even once oil prices rebounded.
Many Qataris are drawn to pub­lic-sector positions, which typically involve more favourable working hours and better salaries and ben­efits than private companies.
It is not clear how successful the efficiency drive has been, although in the 2016 budget “minor capital expenditure”, an area of discre­tionary spending that traditionally includes smaller building projects such as refurbishments, fell 70% year-on-year.
Salaries account for $13.7 billion, about one-quarter of Qatar’s expen­ditures.
Previous austerity steps in Qatar, such as utility bill rises in late 2015 and a reduction in fuel subsidies this year, have fallen hardest on poorly paid foreign construction workers — as will a 5% sales tax on consumer goods and services planned for 2018.
This trend risks increasingly polarising the country between wealthy Qataris at the top and Asian blue-collar workers at the bottom.