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19 March 2024

Keep staff happy... without salary hikes

[Image via Shutterstock]

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By Staff

With businesses focusing on a variety of ways to grow and expand, salary increases have been slowing down across the region, creating more pressure on talent attraction and retention.

According to a new study by The HR Observer and the 19th Annual Compensation & Benefits Forum with 161 GCC companies, about 1 in 10 companies (11 per cent) said that they plan to reduce the size of the workforce.

The key theme seems to be uncertainty in the market; while 70 per cent of companies have not seen an impact on employee remuneration as yet, 60 per cent more companies than last year are uncertain about the bonuses that they will pay in 2015.

“Currently, the most important focus in the market is on managing the pressure from rising cost of living – especially housing, education and healthcare, while keeping control of costs,” said Sandrine Bardot, Dubai-based Compensation & Benefits specialist, Managing Director of The Bardot Group.

“Employees’ expectations are high, and managing retention in these circumstances will be a challenge, given the increasing war for talent,” she said.

“There is a delicate balancing act for companies, who are dealing with uncertainty around company budgets and cash-flow on one side, against the need to remain competitive in the attraction and retention of talent on the other. Increasing living costs in the region are adding additional pressure to this equation,” added Rob Sahi, Conference Director of the Forum.

“One outcome of this is that many companies are becoming more innovative in the non-cash value they can give their employees. Things like flexibility, wellness programmes and recognition can give enormous worth to employees and do not cost organisations any extra money,” he added.

According to previous studies, low or no increments will dominate the job market. As per Data Services Lead for the Middle East, salary budgets are now being set with less and less connection to the consumer price index than they might have been in the past.

“Pay growth is now being driven by the bigger picture; factors such as the competition for talent, growth expectations and also the shifting weight of base salary or guaranteed cash within the overall reward package against other elements such as car allowances and performance-related bonuses. In the Middle East, allowances are very prevalent and can be a substantial portion of the reward package,” reads the study.

(Image via Shutterstock)