SALARY SURVEY 2017

Tougher economic conditions have had a direct impact on salaries over the last year

It would be fair to say that the last 12 months have proven challenging for many companies based in the Gulf region, and this was broadly reflected in our 2017 salary survey.

The results from this year’s edition reveal general stagnation of wage growth across the Gulf Cooperation Council as regional economies tackled decreased government spending, new austerity measures and reduced business linked to lower oil prices.

Indeed, the average monthly salary across our three expatriate groups – Asian, Arab and Western – increased just 0.49 per cent or $54 over the last year, from $11,123 to $11,177. This was 0.3 per cent below the $11,211 seen in 2015.

On a group basis the results were also similar. The average Asian salary increased 1.57 per cent from $9,231 to $9,376, the average Arab salary was down 0.08 per cent from $11,787 to $11,778 and the average Western salary was up 0.22 per cent from $12,350 to $12,377.

Ian Giulianotti, director at one of our participating recruiters Nadia, says the results are broadly in line with the company’s own experience, with more than 40 per cent of clients indicating they

did not receive a pay rise over the last 12 months. While those that did received no more than to keep pace with inflation at 3 per cent, meaning little change in their financial circumstances.

“This is, I think, only the second time in the 28 years I’ve been with Nadia where I’ve seen that the cost of living increase has been greater than the salary increases,” he says.

Other participating recruiters also pointed to the difficult climate impacting wage growth, with Jennifer Campori, managing director of Charterhouse Middle East, indicating caution from regional businesses.

“Depending upon the business sector, the average operating budget allocates 40 per cent of the budget for salaries. And as the 2016 market was relatively flat, employers tended to be cautious on pay increases to ensure that the business remained stable during limited growth periods,” she says.

Given this perspective it was not surprising to see that salaries for many positions remained relatively unchanged in most countries as companies and employees battened down the hatches during a period of uncertainty.

Qatar was something of an exception to the rule, with average monthly wages across all three groups rising nearly 1 per cent, largely thanks to a 7.3 per cent increase on average for Asian positions, from $9,548 to $10,245.

Recruiters indicate that the wage protection system introduced by the 2022 World Cup host in 2015 has made employers in the country more conscious of how they treat employees, while tournament preparation is also seeing the country pay a better rate than its Gulf peers for Asian junior and middle management staff.

Partly due to this increase, there was a slight closing of the gap between average Asian salaries and their Arab and Western counterparts over the last 12 months.

The average Western salary was 27.59 per cent higher than the average Asian

salary in 2017, compared to 28.9 per cent in 2016 – although this was still down on the 26.9 per cent seen in 2015.

The average Arab salary was 22.7 per cent higher than the average Asian salary, compared to 24.3 per cent in 2016 and 20 per cent in 2015.

In comparison, however, the gap between Western and Arab salaries increased slightly from 4.6 per cent to 4.95 per cent, although still down on the 6.9 per cent seen in 2015.

Giulianotti indicates that the pay difference between different expat groups is closing slowly but surely, but in the immediate term the Gulf ’s economic slump means many Asian expats are finding riper opportunities back home.

“This year, one million more Indians left the Middle East than arrived,” he says. “For a professional in India last year, the average pay rise was between 12 to 14 per cent.

“A lot of Indian bankers at middle to senior management – now they’ve got international experience – are going back to India.”

In comparison, opportunities elsewhere are deemed less compelling for Arabic and Western expats, with more protectionist travel policies in the case of the former and currency movements linked to Brexit for the latter meaning most are expected to stay in the region.

Giulianotti suggests job security in particular is being increasingly valued in the region as mass redundancies in some sectors and more modest salary offers

reduce job hopping in comparison to recent years.

“If we talk about two or three years ago, the majority of people were looking to change their jobs for financial benefit, to improve the amount of money they had,” he says.

“At that time most of the candidates that were registering with us would be looking for a 20 to 30 per cent hike. Today they are looking for 5 per cent, and if they can get 10 per cent it's a real miracle,” he adds.

BUCKING THE TREND

With this being said, our recruiters did indicate that there were some sectors bucking the stagnant salary trend.

Campori indicates that information technology and digital marketing professionals in particular are in high demand as the need for technology based payment solutions, online branding and the development of apps increases.

This was shown with a 7.96 per cent increase in the average salary for Arab

advertising creative managers from $7,985 last year to $8,621 on this year’s survey, and a 3.77 per cent increase in the average salary for Western IT managers from $13,021 to $13,512.

“At present technology is a sector which I believe will not see a slowdown for some time,” she says.

“Technology has many pros and cons. The pros being that technology makes our life easier and it takes less time to get things done. The cons are that we take technology for granted and can lose sight of reality.”

Giulianotti says healthcare is also bucking the market downturn in terms of demand for candidates and lower end retail jobs are commanding significant interest.

But, in comparison, other positions appear less in demand. For example, the salary for an Asian events manager was down an average of 11.9 per cent across the region in this year’s survey compared to 2016, from $5,388 to $4,743.

While for our top position – the CEO or managing director of a multinational – average salaries were down 0.76 per cent on the previous year from $35,092 to $34,826, suggesting stagnation was also seen at the very top.

LOOKING AHEAD

As 2017 progresses, some recruiters point to a more optimistic period to come, but this may not be reflected in your pack packet.

“While I believe 2017 is set to be more positive than 2016, salaries will most likely remain flat as businesses still struggle with global market conditions and remain cautious with regard to any extra spending,” says Campori, although she does indicate that the company expects small signs of improvement to translate into increased salary growth.

Giulianotti, meanwhile, points to the impact of the introduction of a 5 per cent value added tax rate across the region from next year.

“If you imagine that 5 per cent is going to be immediately transferred to every employee you’ve got, the cost of living is going to go up,” he warns.

“We’re going to see people asking for pay rises of 8 to 10 or 12 per cent in 2018 and 2019.”

The Nadia director believes these demands are likely to fall on deaf ears, however, as companies continue to navigate tough economic waters.

Despite these factors, recruiters believe the Gulf is unlikely to lose its appeal for expats in the near future with many now staying longer than the traditional three to five years. Expo 2020 in Dubai and the 2022 World Cup in Qatar are still considered bright spots on the horizon and both Campori and Giulianotti suggest the UAE in particular will continue to attract foreign talent.

“The Gulf will always be an exciting place for expatriates and I do not think the UAE will ever lose its allure,” Campori says.

“The UAE is always forward thinking in the development of its people and infrastructure, ensuring it is the most attractive offering to expatriates either on holiday or for longer-term employment.”

Let’s hope this optimism will be reflected in pay rises when our next survey arrives in 2018.