Workers enjoy pay rises across the Gulf

Base salaries in the six GCC countries have increased at an average rate of 7.9% over the 12-month period to August, according to a report released today by GulfTalent.com, a Dubai-based online recruitment firm covering the Middle East. This figure was an improvement on the 7.0% average increase recorded by GulfTalent.com for the same period last year.

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By  Melissa Hancock Published  September 10, 2006

Base salaries in the six GCC countries have increased at an average rate of 7.9% over the 12-month period to August, according to a report released today by GulfTalent.com, a Dubai-based online recruitment firm covering the Middle East. This figure was an improvement on the 7.0% average increase recorded by GulfTalent.com for the same period last year. Through a survey of 3000 professionals in the region, the report showed that Qatar led the regional trend with the highest average pay increase at 11.1%, followed by the UAE at 10.3% and Kuwait at 8.0%. Saudi Arabia and Bahrain had below-average increases of 6.5% and 6.4% respectively, while Oman had the lowest increase at 5.6%. Employment sectors enjoying the highest salary increases were construction and banking – consistent with last year’s results and reflecting the sectors’ faster growth and regional skill shortages. Healthcare and education recorded the lowest increases. The report highlighted continued economic growth and growing competition for talent as key drivers of pay rises, along with geopolitical developments in the region and escalating living costs, most notably in the housing markets but also in fuel and other basic amenities. In Qatar and the UAE, rampant inflation this year will cause average consumer prices to rise at estimated rates of 8.5% and 7.2% respectively. And so while there is still a very healthy inflow of expatriates into the gulf, particularly Dubai, some expatriate residents are leaving the region as high inflation has eroded their saving potential. However, Yasser Hatami, a GulfTalent.com analyst involved in the research has identified a new breed of expat moving to Dubai. “The rise in the cost of living in the UAE over the last few years has been greater than average pay increases," he said. “On the other hand, as the economy matures and new sectors such as investment banking emerge, a new breed of high-calibre expat professionals are considering careers in the UAE, particularly Dubai – not necessarily to make huge savings but to be involved in some high-quality exciting work in a fast-growing region.” A narrowing of nationality-based pay differentials is also helping to boost salaries. With salaries rising faster in India owing to the robust economic growth taking place there, Gulf-based employers are having to re-negotiate pay packages to retain Indian professionals. This is in turn forcing employers to reach out to new sources of talent such as women and countries further a field such as China and Malaysia. Similarly the persistent weakness of the US dollar is currently having a detrimental effect on the attraction and retention of UK and EU residents. Changing employment legislation has further pushed up pay rises – the regional governments’ workforce indigenisation policies are tightening the labour market and there has also been an easing of restrictions on changing employment. The proliferation of recruitment firms, particularly those focused on proactive headhunting, has led to talented candidates being offered higher-paying jobs which has increased transparency in the job market. GulfTalent.com’s report also showed that fewer companies are subsidizing housing and transport in their employment packages, opting instead for a lump-sum cash payment. Another change to pay packages is a preference for performance-based variable pay. “The region’s human resource landscape is fast changing. Pay structures are becoming more sophisticated, with more attention being paid to linking pay to performance,” explained Hatami. Furthermore, more companies are awarding bonuses as well as instituting annual salary review processes and formal salary structures. In particular, multinationals have salary structures that correlate to the position rather than the individual and this is further helping to reduce any nationality-based pay differentials. Overall, the report predicts further upward pressure on compensations throughout the coming year as employers respond to the new realities governing the labour market regionally and globally. However, the large pool of expatriate workforce and the predominance of English language in business allows the GCC countries to easily absorb talent from outside and these factors should ensure that average pay rises remain under control.

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