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Salary hikes expected across Gulf region

Salary hikes across the GCC in 2014

Companies predict 5.5 per cent increase in wages.

September 11, 2013 12:48 by

If the latest research by Aon Hewitt is anything to go by, residents in the Gulf region can expect wage increases next year.

As part of the company’s annual Global Salary Increase Survey 2013, participating companies across the UAE are predicting an average salary increase of five per cent in 2014, while the average hike across the GCC region is predicted to be 5.5 per cent.

The study reveals that the salary hike figures for the UAE and GCC region are in line with the forecasts made for 2013, which were at 5.1 per cent and 5.4 per cent respectively, indicating a consistent confidence in the economic stability of the region.

The survey is based on data from more than 500 firms across the Middle East region, of which 180 are in the UAE.

Among the participating organisations in the Gulf, companies in Saudi Arabia gave the highest salary increase projection for 2014 at six per cent – a slight increase from 5.8 per cent predicted last year.

According to the survey, predictions made for 2013 (5.4 per cent) in the 2012 edition were close to the actual rises awarded earlier this year (5.3 per cent), which should allow employees to feel confident that the trend will continue into 2014.

The study also found a correlation between employee performance and salary hikes. Figures show that a 7.2 per cent salary increase was given to those “far exceeding expectations”, while employees that “did not meet expectations” were given only a 0.1 per cent pay rise.

Robert Richter, compensation survey manager at Aon Hewitt Middle East, says: “While linking individual performance to pay is not uncommon, we advise employers to use annual bonus payments as the larger component for rewarding high performers. Salary increases typically take into consideration a number of other factors along with performance, including inflation, raises to reflect promotions and the need to ensure that employees at the same grade remain within a single pay band.”

While salary hikes across the GCC region is a welcome prediction, it’s important to note that, according to a survey in May 2013, salaries in the UAE are not keeping pace with the rising costs of living.

Sixty seven per cent of the survey’s respondents felt that they were underpaid when compared with industry peers, with 44 per cent saying that they received no wage hike in 2012.

A report by UBS, in September 2012, revealed that the cost of living in the emirate is “rising rapidly compared to other countries”, placing Dubai as the 22nd most expensive city in the world. This is a drop from 19th position in 2009, but the city is still the most expensive city in the Middle East region.

However, the average hourly wage in Dubai stood at AED59.50, making the city the 33rd highest payer in the world, in terms of gross earnings.

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