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Salaries in UAE to rise by 6% this year

Based on current trends, Qatar could become the Gulf’s most popular destination for expatriates. (FILE)

By Staff

Private sector salaries in the UAE are forecast to increase at an average rate of 6.3 per cent this year and the country remains the first choice for job seekers in the Gulf region, according to a survey released on Monday.

The survey – based on views of 32,000 professionals and 1,400 companies in the GCC region – was conducted by an online recruitment company GulfTalent.com during December 2010 and January 2011.

The survey of mobility intentions found that, while the UAE remains the most attractive destination for professionals, favoured by 49 per cent of GCC-based expatriates, Qatar is closing in fast, with a 44 per cent following. Based on current trends, Qatar could become the Gulf’s most popular destination for expatriates.

Meanwhile, employers across the region continued to tap into the talent pool in Dubai, the study said. In addition to professionals who had relocated from Dubai since the onset of the crisis, an estimated five per cent of Dubai’s residents now commute daily to their jobs in Abu Dhabi, a five-fold increase since 2008.

Despite outflows resulting from job cuts, the UAE remained far ahead of all other Gulf countries in terms of popularity with its current residents, thanks to its superior infrastructure. Around 72 per cent of UAE residents prefer to remain there, compared to 59 per cent in Kuwait and 50 per cent in Qatar.
Qatar, Saudi top pay hikes in 2010

In terms of salary hike, Qatar and Saudi Arabia had the highest pay rises in 2010 at 6.8 per cent and 6.7 per cent, respectively. Oman was in third place with 6.4 per cent, followed by Kuwait at 5.7 per cent. The UAE and Bahrain saw the smallest increases at 5.2 per cent and 4.9 per cent respectively, said the survey.

Although much lower than the double-digit increases of 2008, the pay rises were all higher than the rates of inflation, resulting in improving living standards for many. However, an estimated 55 per cent of professionals did not receive any pay increase at all.

Across the region, with consumer spending picking up, the retail sector saw the highest pay rise at 6.4 per cent, while education had the smallest increase at 3.8 per cent.

Among job categories, human resource professionals saw the highest raise at 7.1 per cent. Many executives said that, with their companies increasingly focused on performance, the HR function had assumed a much greater significance. Lawyers had the smallest increases at 4.3 per cent.

According to the study, pay increases were largely driven by the employers’ efforts to retain their top performers, growing demand for skill in Qatar and Saudi Arabia, as well as continued growth in Asia, the main source of talent for the Gulf.
Asians get higher increment

With increasingly attractive career opportunities in their home countries, Asian professionals working in the Gulf received pay rises of 6.1 per cent compared with just 3.2 per cent for Western professionals.

Salaries in the booming Indian economy grew at 11.1 per cent in 2010, compared with just 2.4 per cent in the UK, where unemployment remains high following the financial crisis.

Based on the report findings, the Gulf’s labour market is witnessing “a small but fast-rising Chinese presence” – as employers seek substitutes for India and the Philippines, their traditional sources of skill, while a growing number of Chinese companies win major construction and energy contracts in the region, often bringing the required staff directly from China. Construction of a high-speed railway connecting Makkah and Madina, and a new port in Doha are among contracts recently awarded to Chinese firms.

The employment market in the Gulf is expected to continue growing at a moderate pace, aided by global economic recovery, rising oil prices and continued government spending on infrastructure projects. 61 per cent of companies surveyed expected to increase headcount in 2011, compared to 9 per cent who planned staff cuts.

The study highlighted the rising prominence of Qatar as a destination for professionals. The trend has been driven by fast-rising salaries, falling cost of living, growing employment opportunities and an improving international brand, which came to a grand finale with the country’s surprise qualification to host the 2022 Football World Cup.

Based on an analysis of vacancies advertised by employers and recruitment agencies on GulfTalent.com website, job opportunities in Qatar have grown from eight per cent of all GCC vacancies in 2008 to 16 per cent in 2010.

The survey also found that two per cent of Bahraini residents cross the border each day to Saudi Arabia’s Eastern Province, the home to the country’s oil and petrochemical industries, up from 1 per cent in 2008.
Egypt turmoil could hit salaries

According to the study, potential turmoil in the wider Middle East region, most recently in Tunisia and Egypt, could have a mixed impact on the availability of talent in the Gulf during 2011.

Any sustained upheavals “could increase the supply of Arab professionals from regional hotspots who will seek careers in the Gulf, putting downward pressure on salaries”, the study said, citing the experience of the 2006 conflict in Lebanon which resulted in a mass migration of Lebanese professionals to the Gulf.

The report added that “the resulting coverage of the region in international media may deter some Western professionals from relocating to the Gulf”, similar to the trend seen in 2003 in the immediate aftermath of the Iraq war.

Events in North Africa have also drawn attention to spiralling food prices and the challenges of youth unemployment. According to the study, employers in the Gulf are likely to face tougher workforce nationalisation targets in 2011, as governments accelerate existing efforts to create jobs for their nationals, particularly in Bahrain and Oman which according to UNDP statistics, have the highest rates of unemployment in the GCC.