UAE firms pay more than MNCs

In the UAE, local firms pay on average 17 per cent more than multinational firms, and it widens towards lower level positions, according to a recently published survey.

The results of Mercer's 2011 total remuneration survey showed that, on average, base salary payments in the UAE are on par but in terms of allowances, the average difference is 44 per cent higher in local firms, according to Zaid Kamhawi, head of Mercer's survey practice in the Middle East.

In Qatar that gap is even wider, with local companies paying on average 43 per cent more than multinational companies. On average, the base salary gap is 26 per cent and in allowances, the average difference is 60 per cent.

"This is largely because of the diverse range of allowances local firms pay. Multinational firms offer a range of other elements - many of them not directly linked to compensation - that employees and candidates find valuable and that companies use as tools to attract, retain and develop their talent." said Kamhawi.

"But the existence of the gap continues to serve as a reminder that the fight for good talent will only intensify in the short term."

The survey alsi revealed that, in the UAE, the remuneration gap between Abu Dhabi and Dubai is still evident. According to the survey results, annual base salaries in Abu Dhabi are 7.5 per cent higher on average across all employee levels compared to Dubai, and average housing allowance in Abu Dhabi is 21 per cent higher when compared to Dubai.

Mercer's analysis also uncovered further evidence of a distinct cash gap between the levels of guaranteed income paid to employees in local companies versus those working in multinational firms.

The silver-lining in annual survey, however, was that a large number of UAE firms have predicted 5.5 per cent increase in salaries for the coming year.

The results of the Mercer survey showed that nearly every company surveyed in three key markets - Saudi Arabia, UAE and Qatar - plans to give pay hikes and hire more people during the coming year.

Click here to find out the average pay package of UAE's IT professionals

More than 300 firms across all industries were surveyed and the overwhelming majority predicts raising salaries in the coming year by between 5.5 per cent (UAE) and six per cent (Qatar and Saudi Arabia).

Yet according to Kamhawi, the optimism around compensation and business performance - which heralds a period of increasing competition for talent - is offset by caution around the possible impact of regional and global events on economic activity and investment.

"Broadly, economic activity across the Mena region has been solid in most areas but confidence and optimism has been buffeted by pockets of social unrest, in what has been a period possibly unique in the Middle East in the modern era," he said.

"Combine that with uncertainty about events in Europe and the US economy, and it is unlikely that 2012 will bring about any change in the short term, although as always there will be pockets of prosperity like here in the GCC."

Click here to read how UAE's recruitment activity is picking up again

Kamhawi said companies are increasingly looking at compensation trends and predictions to help with budgets and planning, and are hungry for information, insights and market practices at a time when the global and regional economic outlook is far from certain.

Mercer's Total Remuneration Survey (TRS) data also showed consumer and durable goods sectors that led the way in salary increases in 2011 are set to continue the trend in 2012, along with UAE-based high tech firms.

The annual survey covers a vast range of sectors from consumer goods, energy and high-tech to durable and manufacturing. It highlights compensation trends from top executives to the administrative level.

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