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Promises of salary hikes in the UAE

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Employees to receive five per cent increase, reveals study.

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October 23, 2013 12:16 by



A recent study reveals that companies in the UAE are granting their employees an average salary increase of 5.2 per cent this year – defying the global trend for ‘limited’ pay rises.

The 2013 Total Remuneration Survey, released yesterday by research firm Mercer, adds that these hikes give employees greater purchasing power than their GCC neighbours. It polled more than 230 companies across various industries and points out that the highest salary increases were in the energy and life sciences sectors, although all industries have broadly comparable increase figures.

Although pay rises in the UAE are in line with Qatar and Saudi Arabia (at five per cent and 5.6 per cent respectively), inflation in these countries – excluding housing costs – is higher than the 1.6 per cent estimated in the UAE. Qatar’s inflation for 2013 is measured to reach three percent and Saudi Arabia at 3.7 per cent.

Finding new work

A significant finding of the study is that 68 per cent of the organisations polled intended to increase their personnel levels over the year, compared with 60 per cent in 2012. Voluntary turnover has been found to be higher in 2013 and recorded as being 12 per cent of full-time employees, which it suggests could be an indicator of a more dynamic labour market.

Nuno Gomes, Mercer’s information solutions leader for the Middle East region, says multinational firms with operations in the UAE still perceive the country as a key growth region.

“This is exemplified by the fact that organisations intend to hire more staff in the coming year, as well as the fact that voluntary turnover is higher than it used to be last year,” he says.

Housing allowance on the low

Despite the rise in rental and property costs for UAE residents, it appears that organisations are only offering small increases on their employee housing allowances.

Mercer’s poll reports an increase of eight per cent on housing allowance, slightly higher than the 6.7 per cent increase recorded in its 2012 survey.

“One of the main reasons we have not seen the increase that the market expects is because most organisations feel that housing costs have not reached pre-crisis levels and allowances have not been reduced in the aftermath. As a result, the current amounts should be sufficient to accommodate employees’ housing needs,” adds Gomes.

Bright future

Mercer’s report predicts that salary increases for UAE employees in 2014 will remain close to this year’s figure at approximately five per cent. It suggests an increase in long-term incentives in the region, with payouts that occur over a longer period of time and which emphasise sustained performance and employee retention.

However, bonus payouts have declined in comparison with 2012, on average by nearly 20 per cent in 2013. “Keep in mind that payouts in 2013 are based on performance in 2012. With increased activity that we’re seeing in 2013 and the continuous growth of the UAE economy, we should expect bonuses to pick up in 2014,” says Gomes.

 

This is the second study in two months that forecasts wage hikes across various industries in the UAE.

In September, an annual survey by Aon Hewitt revealed that companies are predicting an average salary increase of five per cent in 2014, while the average across the GCC region was estimated to be 5.5 per cent. According to the survey, predictions made for 2013 (5.4 per cent) in the 2012 edition is close to the actual pay increase awarded this year (5.3 per cent).



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