Private sector likely to see pay cuts

Expect bonuses and perks to get the axe, advise experts

The New Year may not be so happy or prosperous for those working in the country's private sector, recruitment experts have warned. Instead of pay freezes being thawed, employees working for private companies are likely to see further salary cuts, lower bonuses and less perks, they say.

The market, they claim, remains oversupplied with talent which can be hired cheaply compared with the heydays of 2007/08. Matthew Carter, Managing Director at McArthur Murray, sees the downward trend continuing to the next year as well. “I can only see the private sector reducing salaries as they believe that they can still hire people cheaply and that there is no problem in the supply of people,” he told Emirates 24|7.

“Existing staff still employed can expect a reduction in salary to be discussed in 2011 along with a reduction in quality of benefits, such as cheaper healthcare, cheaper flights etc. We expect bonus levels to drop as well,” he said adding that “the private sector is generally struggling still irrespective of the PR in the market. I can’t see the employers offering increases in 2011 to existing staff. Only in some very niche markets such as renewable, nuclear and possibly oil and gas can we see the trends being different.”

Commenting on the senior layer of employees, Konstantina Sakellariou, Partner, Marketing & Operations Director at Stanton Chase, said: "I would say that increases in remuneration are subject to overall performance of the company and not to general trends.

“If a company feels comfortable with revenues and their sustainability, then senior executives are going to receive an increase, either in the basic salary or in some of the allowances offered. Senior executives know from the beginning that they are not simple employees, waiting for a salary increase, but they contribute in making this happen,” she told this website.

But considering the current global economic scenario, hikes may not be expected, she added. “The international markets are not solid yet, so all companies are very cautious as per the increase of their expenses (including expenses in human capital). Companies will be making rational decisions for their expenses and will avoid the huge remunerations of the past that were not really paying back in productivity and profitability. This is indeed a way that most companies will choose for their operations in the next year(s),” she said.

Of those who seem hopeful about any pay hikes, say things have mellowed down a lot and only rationality will prevail.

As per Lama Ataya, Chief Marketing Officer at Bayt.com, an online job search portal, employee satisfaction in the UAE is in the satisfactory range. “[We] gauge employee opinion and satisfaction levels vis-à-vis the salaries they receive, and how these have kept pace with the cost of living: 58 per cent of professionals in the UAE are ‘satisfied’ to ‘very satisfied’ with their current income.

"However, the total percentage of raise which professionals in the UAE stated they have earned in the past 12 months was 6.3 per cent compared to 10.6 per cent the year before. Hopes are high still vis-à-vis salary raise in the year to come with the average salary raise expected for year-ending 2010 being 11.6 per cent (indicating expectation that the effects of the financial crisis are finally waning).  Moreover, as another barometer of consumer sentiment, 47 per cent of the UAE’s professionals surveyed expect their financial situation to be better in a year's time.”

Michael Al-Nassir, Partner and Head of Middle East, Africa and India at Pedersen and Partners, said: “The private sector is (and has to be) optimistic as is it driven by return on investment, and the shareholders and boards would like to see in 2011 a significant pick-up.”

 

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