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Voluntary and Involuntary Redundancy in the UAE Proposal

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Updated: Jul 15th, 2020

Introduction

Although redundancy is not new, it has played a major role in shaping the world economy and in influencing organizational behavior, particularly in how employees react to change, in downsizing and restructuring activities where their job is at stake. Most employees are exposed to two forms of redundancy – voluntary and involuntary. Voluntary redundancy is when employees are given an incentive but obligated to the dismissal terms and conditions.

Involuntary redundancy is more severe where employees are simply terminated without any type of settlement (Employment New Zealand, 2016). According to Waters (2007), voluntary redundant employees experience lower levels of depression and engage more in job searching activities than those that are involuntary. The involuntary employees reported a higher level of insecurity and lower organizational commitment in their new jobs (Waters, 2007). A new job can refer to another department within the same organization or a new company the employee has found.

Redundancy is the common term used in the United Kingdom UK and Australia for employees terminated from their jobs for some reason or another (Parris & Vickers, 2010). Seglow (1970) examined the reactions to redundancy and found that procedures to restructure or downsize are crucial in assessing the labor market and behavioral patterns in a redundancy situation in which laborers have various negative reactions. Management should be careful in evaluating workers’ functions, whether this worker’s job will be affected or not, as this will create impact not only on employees but also on the future of their companies. Downsizing might be a trend for cost-saving measures of firms but there could be other ways. Firms have to discreetly assess the situation before informing employees of a possible downsizing or reorganization.

Although this research is more than 40 years old, Seglow’s (1970) work is still relevant to the current situation as he examined the reactions to redundancy and found that not all workers’ attitudes can be explained in a work situation. Economic impact and the method of dealing with redundancy should be taken into consideration.

Seglow’s (1970) research has some limitations as he did not examine directly the economic implications of redundancy on the workers, what these workers would do after they would lose their jobs, the loss of stable social relationships attached to the job, and the feeling of an insecure future. Some studies have not properly investigated the primary cause of restructuring.

Gold Thorpe (cited in Seglow, 1970) argues that looking at how autonomous the workplace enterprise is concerning the wider social structures involved is of crucial importance as it will define how the affected workers perceive the redundancy. The environmental perspectives help workers adjust to the situation of redundancy.

Withenshaw (as cited in Walsemann, 2005) argues that firms should be more flexible by helping workers develop a mindset that allows them to be responsive to the changes in the organization. It is therefore important that workers can change their assumptions about the way the organization works in times of change. Workers should also review their values, talents, and goals so that they can grasp the context of organizational structure and where the organization is going. Sweet (1989) adds that the impact of termination has far-reaching effects.

Rationale

There is not much research on redundancy regarding the Gulf region and specifically the United Arab Emirates. Limited research has also been afforded into the personal experiences of employees and executives who encountered redundancy because of organizational change or downsizing. Layoff and redundancy studies were more focused on survivors of downsizing, meaning those who were retained by their respective organizations (Horsted & Doherty, 1994), but not much attention has been given to employees and executives who were laid off as a result of downsizing. This research will provide a gap in the lack of studies on both types of redundant employees.

Aim/Objectives

This research investigates the emotional impact of redundancy on employees in the United Arabic Emirates. The research will allow people to understand the full impact of redundancy on the United Arabic Emirates workforce better in comparison to others, especially developed countries.

Research Question

  • The research will deal with the question: how does voluntary or involuntary redundancy affect the individual self-esteem on the expatriate UAE workforce?
  • A second parallel question is: In what way does voluntary or involuntary redundancy affects the UAE workforce emotionally?

Literature Review

Employment termination can be caused by several factors and is usually associated with considerable psychological dynamics for supervisors and employees in the workplace. Downsizing of business signifies one event causing employment termination (Dessler, 2003). Parris and Vickers (2010) argue that downsizing and organizational restructuring are common practices nowadays and can lead to redundancies.

As an organization downsizes, the number of people the firm employs has to be reduced. Employees have to be reassigned to other tasks, but others have to be terminated. Termination is synonymous with dismissal. Organizations have to properly deal with this redundancy activity to prevent psychological outcomes on the part of employees who will be subjected to redundancy. Other companies simply do it without thinking of the employee’s welfare.

Dismissal can be a drastic disciplinary step imposed upon an erring employee and needs an adequate cause. An employee can be terminated or dismissed from employment if he/she has not performed well in the job, the qualifications do not conform to company standard requirements, restructuring makes the position useless, or the employee has committed some form of misconduct. Dessler (2003) indicates that the dismissal should only occur after all reasonable steps have failed.

Emotions associated with the dismissal of an employee can range from certainty to ambiguity about one’s actions, from respite to self-blame, from happiness to grief, and from the belief of having made the right decision to misery (Walsemann, 2005).

Gulf Cooperation Council (GCC) Work Context

The GCC work environment is unique. There are not only local companies but a myriad of multinational companies which make up the employment market. The UAE and the GCC have created a large number of jobs, which the World Bank has described as unprecedented (Forstenlechner, 2008). This has attracted a workforce from around the world because of the offered grand salary packages, a dynamic job market and better quality of life or a luxurious lifestyle in the UAE context.

The job market promises ex-pats a chance to save and aim for higher goals with endless opportunities to grow and expand. There is a huge demand for manpower resources, which opens the door for all types of people to come to the GCC. Most people who come to the Gulf are from the Indian sub-continent and some from various parts of Africa (Rehman, 2013).

In contrast, most UAE and GCC nationals prefer to be part of the government workforce. According to UAE statistics, 16,187 nationals joined the workforce in 2006 and this was expected to rise in succeeding years. UAE nationals alone could not be accommodated by the bloated public sector and expatriate labor is being absorbed by the private sector (Forstenlechner, 2008).

The reason behind the poor representation of the local workforce in the private sector is due to the long working hours and the focus on the employees’ performance (Naithani, 2015). Industries prefer to hire expatriates because of their work habits and the kind of training they attained in their country of origin. Expats have a faster ability to learn and adjust requiring little training and are experienced in the work they have applied.

Expatriates working in the GCC region are not entitled to the pension scheme whereas all GCC nationals are entitled to pension regardless of which part of the GCC workforce they belong to. Thus, the psychological impact of redundancy on these expatriate employees may differ from GCC nationals. Expatriates also face the challenges of visa requirements and other legal aspects of redundancy (Naithani, 2015).

The majority of migrants do not have a chance of gaining citizenship. The expatriates’ stay in the country is limited; their visas have to be renewed within 2-3 years, which puts them into an unsecured situation where the employer can terminate them anytime (Naithani, 2015). It is assumed that this can lead to a huge psychological impact, especially since most expatriates, white or blue-collar workers, have families and children in their home country waiting for financial support.

Redundancy and the Legal Aspect in the UAE

Redundancy does not exist in the UAE law, neither is there a legal definition of ‘redundancy’. The Ministry of Labor does not require an employer to legally justify a serving notice of termination of employment (Clark, 2012).

In recent years, the UAE government has embarked on “Emiratization” of the private sector as the country has realized that dependence on expatriate labor has serious long-term consequences on the political, economic and social aspects of UAE society (Al-Lamki as cited in Forstenlechner, 2008). This led to the establishment of a government agency known as Tanmia (National Human Resource Development & Employment Authority) in 1999 which marked stronger government control on the private sector’s demand for expatriate labor. Emiratization focused on some growing sectors like banking, insurance, and hospitality. The government introduced the quota system in the banking sector where nationals were more preferable than expatriates (Mutawa as cited in Forstenlechner, 2008). Because of this regulatory activity, the cited sectors experienced remarkable redundancies, whether voluntary or involuntary.

Reactions to Redundancy

There are mixed emotions experienced by different redundant employees, depending on their age, gender and ethnicity. Employees express different reactions to voluntary and involuntary redundancy; some experience depression, others difficulty in job search activity. The course of these emotions could be the way this news has been communicated to those employees by their human resources staff or the reason for the redundancy, some of which could be due to simple retrenchment for their performance or even internal politics caused by in-group and out-group as well as the usual common causes of retrenchment (Clarke, 2007). Some studies found that sudden unemployment or dismissal from job caused ill health, not just psychological outcomes (Parris & Vickers, 2010).

Furthermore, recent research conducted in the UK on transitions following redundancy from full-time work among people over 50 proposes that the majority leaving full-time jobs between 50 and pension age go into self-employment or part-time temporary work and retire directly. This particular age group looks for work-life balance and other aspects of their lives. The transition to retirement following redundancy during 1980 and 1990 was perceived as an individual right and in some countries was understood as recognition that older workers should step down to make a room for a new generation of younger workers (Parris & Vickers, 2010).

In general, redundancy is not a pleasant experience for any employee, be it voluntary or involuntary redundancy. Research focusing on reactions of redundant employees in the public sector in the United Kingdom found that the decision to downsize affected the majority of the employees emotionally. Employees who received the news of redundancy experienced the cycle of grief, leading to psychological problems. It was followed by denial for a certain period, and anger to the organization, to family members or colleagues. Some tried to desperately negotiate or surrender, or eventually gave up the fight and resigned, while others tried to be realistic and looked at the situation in a brighter way by searching new career alternatives and adapt to both personal and organizational change (Davey, Fearon, & McLaughlin, 2013).

Isabella (2006) indicated that those who survive the redundancy get demotivated but worried and start asking questions about their positions and career development in terms of climbing the corporate ladder. An employee who is promoted or rewarded for exceptional performance will become more focused on improvement and look for advancement opportunities. Organizations today pay big attention to the career implication of downsizing without being aware of how these survivors assess the same event overall their careers.

The study by Parris and Vickers (2010) recorded the reactions of redundant employees. For example, some men viewed themselves as “being less a person” when they were laid off. There was an understood belief that these men should be able to control the situations and the relationships around them. When they were made redundant they felt they did not have personal control. One particular case study was a young man “at the height of his career,” who sensed that his career was unexpectedly stopped when he was made redundant. Most employees expressed that they were unprepared at the time redundancy was announced.

In the same study by Parris and Vickers (2010), the respondents were seen dealing with their emotional state during the re-establishment activities. The respondents spoke of the countless emotions they had at the time of redundancy. These emotions included anger towards the organization, sadness at the thought of being alone, and fear for their future and their families.

Some respondents refused to speak about their experiences and were unwilling to admit their fears, while others wanted to present themselves as strong amid the uncertainties. There were also feelings of embarrassment as they described their situation: before they had competence and ability at work but the redundancy let them feel they were worthless. While management assured them that the redundancy activity was a mere “part of business,” the male respondents spoke of their being assaulted of “their sense of worth” (Parris & Vickers, 2010).

Respondents expressed their desire to restore their confidence – to look and feel successful despite what happened to their jobs and careers. They had to restore their once-held statuses in their previous jobs. The status issue is also noted in other studies that state that the social conception and authentication of male identity are established around such traits as success and self-reliance in the work setting (Rees & Garnsey; McCarthy & Holliday as cited in Parris & Vickers, 2010).

According to Patel (2009), redundancy can be the time of a worker’s life where one can focus on change. For example, some accountants in the UK were made redundant during a recession. As a result, they felt anxiety and fear of not finding another job. However, it was a matter of career choice for the accountants as most of them were able to move on by becoming math teachers (Patel, 2009).

Differences between Voluntary and Involuntary Redundancy

Redundancy is a process that begins within the organization. Organizations experience constant changes due to technology, mergers, takeovers or restructuring, economic downturns whether local or national. Sudden labor surplus demands to downsize. In voluntary redundancy, the employee has a limited choice (Wells, 2013).

Voluntary redundancy is divided into two sub-categories. One is classical voluntary which is when the employee steps forward and accepts it by volunteering. Targeted redundancy appears to be less stressful than involuntary (Wells, 2013). However, voluntary redundancy is still constrained by the influence of organizational change. The role of finance has had a more positive effect on employees who face voluntary redundancy. Employees look at it as an opportunity than a loss. This type of redundancy has allowed employees to have large payouts (Clark, 2007).

Involuntary redundancy means that an employee is “laid off” or “terminated” from the job for some reason or another. Examples of involuntary ones include temporary job endings or separations. Union members are protected from redundancy problems but unions are not seen in the Gulf region because of prohibition. Thus, employees are not protected from redundancy due to harsh treatment from firms in these areas (Pierse & McHale, 2015).

Redundancy Effects on Employees

In the UAE, employees are at the mercy of their employer when redundancy issues occur.

Firms tend to be quite indifferent to the welfare of employees and their families. Milner et al. (2014) indicated the direct correlation between involuntary redundancy and suicide. Many employees consider involuntary redundancy as traumatic which may cause psychological problems. In Milner et al.’s (2014) study employees experienced anxiety disorders, which are prevalent in male employees.-. The study also found that socioeconomic status plays a key role in the emotional and psychological wellbeing of employees.

Employers can deal with this by a constant dialogue with employees, especially if a large percentage of employees are to be made redundant. Compensation for redundant employees should be fair and must follow other fair practices of developed countries. For example, Williams (2009) noted that employees in Australia aged below 22 years old should be entitled to half a week’s pay for a year of continuous service, while those who have had continuous service and are aged 41 years and above are entitled to a week-and-a-half pay for each year of continuous service. According to Williams (2009), this should be followed by other industries, particularly in the developing world. But different industries provide various options.

Employees who were subjected to involuntary redundancy carried with them their negative experience to their new employment (Waters & Muller, 2004). The sour legacy, characterized by less commitment and high-level of job insecurity from their previous employment is carried to their new employment. Voluntary redundant employees have less negative feelings and manage to be reemployed faster than the involuntary ones.

The purpose of this research is to investigate the psychological impact of voluntary versus voluntary redundancy of employees following an organizational change. An organizational change can be due to internal factors such as restructuring, or external factors like financial crisis, globalization or other economic factors.

Research Methodology

The research will be based on the Interpretative Phenomenological Analysis (IPA), which entails working with a much smaller sample than other methodologies such as thematic analysis (TA) and concentrates on the idiographic focus. This methodology premises that people are “self -interpreting beings” (Breakwell, Smith & Wright, 2012).

As such, this method is ideal for qualitative research of this particular type of research topic because IPA can identify how people can assimilate their life experiences and recount them detailing all the emotional and psychological impact they experienced during that period. Thus IPA can empathize with the participant regarding this life event and analyze the reactions (Breakwell, Smith & Wright, 2012).

Interpretive Phenomenological Analysis (IPA) is a method used for qualitative studies and appropriate for the subject of phenomenology. It can be regarded as a new methodological approach but this is currently used by researchers to touch on the subject of social and health sciences, or the phenomena around human subjects (Larkin et al.; Smith et al. as cited in Murray & Holmes, 2014).

IPA, therefore, provides another way to qualitative research in psychology by finding discreetly at how human beings talk about the taxing experiences they face, and how they find solutions and put the exact ways to deal with them (Smith as cited in Murray & Holmes, 2014). In one study, researchers used phenomenological research design to study isolation and psychiatric patients, and Holmes and colleagues (as cited in Murray & Holmes, 2014) found that the patients regarded seclusion as a form of punishment. These patients expressed their being part of a community and that they lacked someone, a caring nurse perhaps, to help them in their predicament.

IPA can be used as a counterpart of traditional methodologies used in research as it provides an understanding of the respondents’ experiences that can lead to psychological problems. For this purpose, this study’s face to face semi-structured interviews is intended for phenomenological interpretation, to understand the personal activities and the meaning of participants’ experiences, an attribute that is normally not developed in many studies (Brocki & Wearden; Larkin et al. as cited in Murray & Holmes, 2014).

After a discreet study of the IPA literature, this research proposal will find that the task of properly accepting and familiarizing IPA will provide a better challenge than we think is possible. This researcher may find it is in the middle of a debate regarding personification and language. This is because language is dominant both to the methods a subject gives sense and to the interpersonal, open context of the research interview. A more distinctive discussion with the participants and a fruitful comparison with the literature on the data collected will be expected of this research. That is IPA.

Merleau-Ponty’s (as cited in Murray & Holmes, 2014) phenomenology explains that body and language, or speech in general, are personally connected and they are inseparable. But there is the common belief in the IPA literature that the body is assumed to exist behind forthright descriptions from the study participants. In other words, IPA tends to assume an intelligible respondent from the start, or a subject who can provide a straightforward answer to the questions as he/she describes the experiences that lead to such a psychological problem, but who does not seem to question his/her predicament (Murray & Holmes, 2014). IPA, therefore, can be considered radical in one sense and we have to be careful that the study will not miss the point of critically analyzing the accounts that will be discussed in the interviews.

The data will be obtained through face to face semi-structured audio-recorded interviews based on open-ended questions because this method represents the ideal for IPA.

Sample

The participants will be a homogeneous group of 6, split into two groups: 3 participants who experienced voluntary redundancy and 3 who have experienced involuntary redundancy at some time in their life.

The age group will be 30 – 65 years. The genre will mainly comprise both male and female expatriates. The sampling will be taken from employees of diverse, large-sized companies in the UAE.

Analysis

The collected data as words will be studied and analyzed qualitatively according to IPA methods, and subsequently, conclusions and recommendations will be formulated in consideration of the research question.

Ethics

Ethical considerations will also be factored into the research and explained to the participants, informing them that the research will be used for purely academic reasons, that the results of the research will not be made public but the outcome of the study will be used Academically to assist future studies about voluntary and involuntary redundancies and how employees can be aided in the process of redundancy. The study will also help redundant employees cope with the prospect of being laid off from their jobs. The study will focus on expatriates who have experienced being redundant employees.

The major ethical principles to be taken into consideration when doing qualitative research are not harm any participant either knowingly or unknowingly. This would go to entail breaking off the study in extreme circumstances if an adverse reaction was noted for the participant. Secondly to protect anonymity, ensure all identifying information is removed from the study. Likewise maintaining confidentiality can sometimes put you in a delicate balance phenomenon if you learn something potentially harmful to a participant even though it may be unrelated to the study; All participants must be fully informed of nature and possible emotional risks involved in the study. Insensitivity should be avoided and if a participant drops out they should not feel victimized for doing so. The final thing is to ensure the environment created by the researcher is trustworthy and that data is not misinterpreted in the research and evidence is presented to ensure credibility (Aurelius, M.1992)

Conclusion

As a whole, it can be concluded that the situation in the Gulf area is unique and cannot be compared to other countries when it comes to the psychological impact of redundancy on both the local and expatriate communities.

Studies have noted the psychological impact of redundancies on employees. Employees’ morale is low if they feel that their job is not stable, or if it can be abolished in the future. Redundancies cause depression and other psychological effects on expatriate’s workforce as employees and workers become worried about their families and children at home, who need their financial support. There is also the concern of finding new jobs and other concerns that crop in the minds of redundant employees, such as: how can they find new employment as fast as they could and how to deal with a new work environment? A unique problem faced in the UAE is the sponsorship issue and ban which could have a far-reaching impact both physically and emotionally.

References

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Williams, N. (2009) Staff morale in decline as redundancies soar. Personnel Today, 43(1), 1-20. Web.

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