UAE to see 2.2pc net salary rise in 2016

The Pak Banker - - 6BUSINESS -

Salary in­creases in the UAE are fore­cast to be higher than the av­er­age rate of hike in the GCC, and given the low­est re­gional in­fla­tion rate of 3.1 per cent, em­ploy­ees in the emi­rates stand to en­joy a 2.2 per cent net salary in­crease in 2016, the high­est in the re­gion, a new re­search re­port said on Mon­day.

Salaries in the UAE are fore­cast to rise by 5.3 per cent vis a vis a GCC av­er­age of 5.2 per cent.

Al­though salary hikes in Saudi Ara­bia are pre­dicted to av­er­age at 5.9 per cent, with an in­fla­tion rate of 4.7 per cent, the net in­crease for Saudi em­ploy­ees would be only 1.2 per cent.

Salaries across the GCC are fore­cast to in­crease at an av­er­age of just 5.2 per cent in 2016, down from 5.7 per cent in the pre­vi­ous year, a re­search re­port re­leased by on­line re­cruit­ment firm GulfTa­lent said.

The slower growth rate means av­er­age pay rises across the GCC are set to be lower in 2016 than at any time over the past 10 years, de­spite the ris- ing cost of liv­ing caused by cuts in govern­ment sub­si­dies, said GulfTa­lent.

"Many pro­fes­sion­als in 2016 are likely to face a dou­ble-whammy of ris­ing liv­ing costs cou­pled with stag­nant wage growth. As a re­sult, real salary in­creases net of in­fla­tion are ex­pected to be sig­nif­i­cantly lower than in pre­vi­ous years," the re­port stated.

One source of com­fort for res­i­dents is fall­ing rents in parts of the re­gion, in an oth­er­wise in­fla­tion­ary mar­ket, the re­port found.

The re­search re­port was based on GulfTa­lent's sur­vey of 700 em­ploy­ers and 25,000 pro­fes­sion­als across the six GCC states. Draw­ing on its sur­vey re­sults, the study found that salaries across the GCC are fore­cast to in­crease at an av­er­age of just 5.2 per cent in 2016, down from 5.7 per cent in the pre­vi­ous year. Saudi Ara­bia is ex­pected to top the re­gion's pay in­creases, at 5.9 per cent. How­ever, with in­fla­tion in the King­dom fore­cast at 4.7 per cent in 2016, real pay rises net of in­fla­tion will av­er­age just 1.2 per cent.

Pro­fes­sion­als in the UAE are ex­pected to en­joy the re­gion's se­cond high­est salary in­crease at 5.3 per­cent. Qatar is next with 4.7 per­cent, fol­lowed closely by Kuwait and Oman at 4.6 and 4.4 per cent re­spec­tively.

Bahrain fares the worst among the six GCC states, with the pro­jected salary in­crease of 3.7 per cent match­ing the fore­cast in­fla­tion rate ex­actly, leav­ing em­ploy­ees with no net in­crease in their pur­chas­ing power. The study re­ported a marked slow­down in re­cruit­ment ac­tiv­ity in ad­di­tion to lower pay rises, with em­ploy­ers much more cau­tious in adding to their pay­roll. Much of the re­cruit­ment ac­tiv­ity is now fo­cused on re­place­ment hir­ing only.

Ac­cord­ing to the study, sec­tors that are par­tic­u­larly hit in­clude oil & gas and con­struc­tion, which de­pend heav­ily on govern­ment in­vest­ment. On the other hand, retail has seen lim­ited im­pact and health­care is boom­ing, driven by a com­bi­na­tion of pop­u­la­tion growth and reg­u­la­tory changes mak­ing health­care pro­vi­sion manda­tory for em­ploy­ers. 68 per­cent of health­care com­pa­nies sur­veyed re­ported an in­crease in their head­count dur­ing 2015.

The study found that, with fewer jobs in the mar­ket and can­di­dates seek­ing sta­bil­ity, em­ployee turnover had fallen in most sec­tors. It warned, how­ever, that em­ploy­ers fail­ing to meet the pay ex­pec­ta­tion of their top per­form­ers due to fi­nan­cial pres­sures could risk los­ing them to com­peti­tors.

Ac­cord­ing to the study, em­ploy­ers cur­rently hir­ing are hav­ing much greater suc­cess in se­cur­ing top can­di­dates than in pre­vi­ous years and some are us­ing this as an op­por­tu­nity to upgrade their staff.

Some firms are also re­port­ing greater suc­cess in at­tract­ing na­tion­als, thanks to slower pace of hir­ing in the pub­lic sec­tor.

The sur­vey found that an in­creas­ing num­ber of firms have been re­duc­ing head­count, par­tic­u­larly in en­ergy and con­struc­tion. Over­all, 14 per cent of sur­veyed firms in Saudi Ara­bia re­ported plans to re­duce head­count in 2016, com­pared with nine per cent in the UAE. The study noted that, de­spite a marked slow­down, the sit­u­a­tion in Gulf coun­tries re­mains far more sta­ble than in most other oil-de­pen­dent economies.

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