Headhunting talent

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Deborah Webster

Choosing the life of an expatriate comes down to money and career opportunities. Company loyalty is a low card in the deck, and the result is significant movement of professionals between employers as well as from one country to the next – at least this is the perspective of corporate headhunters operating in the GCC region. While there is significant international interest from professionals in the Gulf region – attracted by high tax-free pay packages and career opportunities which would be out of reach in their home countries – the rapid economic growth of the GCC region over recent years has produced a highly competitive environment for drawing in foreign talent, particularly English speaking individuals who are perceived to be better “business communicators”.

The outcome has been an intense contest between the Gulf countries to attract new talent of so-called “knowledge workers” as well as retain these professional “assets”. Who is winning the “contest” – surprisingly the UAE is ahead of the pack by a long draw despite relatively lower remuneration packages and an astronomical rise in living costs, at least according to a recently released research report “Pay, Inflation & Mobility in the Gulf” compiled by GulfTalent.com, the findings of which are largely supported by international recruitment specialists Money spoke to.

Approximately 73% of expats moving to the Gulf choose the UAE, with 38% of this number specifically selecting Dubai, according to the GulfTalent.com report (the report surveyed 18,000 professionals, consisting of 1,000 GCC nationals, 6,000 expats living in the GCC and 11,000 individuals outside of the Gulf wanting to relocate to the region). “...Much of the UAE’s success in attracting talent appears to be linked to its higher brand awareness internationally...Such is the level of interest in Dubai that recruiters find themselves inundated with applications across the world,” the report notes.

Notably, 62% of professionals in the GCC region are interested in moving to the UAE while 78% of expats currently located in the UAE express a desire to remain where they are. “Survey respondents cited attractive career opportunities, good infrastructure and facilities, and a liberal society as the main reasons for choosing Dubai,” the report says.

The GulfTalent.com report identifies Qatar as the second most popular expat Gulf destination (based on higher salary packages) while Oman appears to be the only country losing not only expats but its own nationals. The other GCC countries seem to be just holding their own in the foreign talent retention battle. “With the economic boom causing staff shortages across the Gulf, the UAE’s immense popularity is further straining the availability of expatriate talent for the rest of the region. According to GulfTalent.com’s report, employers in Kuwait, Saudi Arabia, Bahrain and Oman have difficulty attracting professionals in sufficient numbers and many are losing existing staff to the UAE,” the report observes.

Income vs. Cost

Qatar and the UAE have the highest personal living expenses in the GCC region, according to the GulfTalent.com report, with the greatest cost being housing: The average cost of rental accommodation in Doha is reported to have risen by 83% over the past two years while Dubai’s rental housing rose by 60% over the same period to now account for 30% of household income (other sources suggest that non-shared rental accommodation in Dubai is really closer to 50% of net income). In contrast, the cost of rental housing in Riyadh, Saudi Arabia, increased by 19% over the past two years. Overall, consumer pricing in all of the GCC countries – excluding the UAE and Qatar – has remained moderate over recent years (see HSBC economic outlook report in this issue’s news section for further details).

Alarmingly, the GulfTalent.com report shows that 43% of expats living in the UAE are not saving money (where in Saudi Arabia only 23% of expats report no savings), with 7% of the total reporting that salaries do not even cover their monthly living costs, thus forcing them to “borrow” from existing savings. The biggest challenge facing expats in the UAE is that the rising cost of living has far outstripped salary increases, the report notes, “Although salaries have risen, in the case of Qatar and the UAE, average increases have been well below the rent and [general] price rises. As a result, net disposable incomes have fallen sharply”.

Overall, annual salaries across the GCC region rose by 7% and 7.9% over 2005 and 2006, according to the GulfTalent.com report, with Qatar showing the highest average increase of 11.1%, followed by the UAE at 10.3%, Kuwait at 8%, while Saudi Arabia and Bahrain clocked in below the regional average at 6.5% and 6.4% respectively. Oman was the back-runner with an average salary rise of 5.6% over the same period (see chart of salary increases by country).

The highest salary increase job sectors across the GCC region were: Construction at 12.8%, followed by banking & finance at 8.2% and oil & gas at 7.7%. The lowest salary increase sectors were: Healthcare at 4.5% and education at 3.5%. “[Job] Sectors registering the highest pay increases appear to be those experiencing the fastest growth and facing skill shortages regionally,” the GulfTalent.com report says.

“If you’re in Saudi Arabia you can stash cash away, but not so if you’re in Dubai,” says Deborah Webster, a consultant at international recruiters Korn/Ferry International. In this respect, she believes the UAE/Dubai workplace is changing in that both the government(s) and employers are realizing that the cost of living has reached a “threshold” that could deter foreign workers as well as spark an exodus of existing professionals. “Companies are not looking for ‘job hoppers’,” observes Webster, so they are beginning to address the growing disparity between salaries and the cost of living. Also, the authorities are reacting, she notes, with the most recent “rent cap” on residential properties introduced by the Dubai government a sign that the cost of living has to be brought under control if the UAE, and Dubai in particular, is to retain its competitive standing in the GCC region. “It’s not just about attracting, it’s also about retaining,” she points out. As a cautionary note, Webster refers to recent UAE government discussions concerning the introduction of a consumption/sales tax, and suggests that in the current heated pricing marketplace, such a move could prove a major deterrent in attracting new foreign professionals to the Emirates.

Already, the GulfTalent.com report notes, about 6% of expats in the UAE (many of which are Indian nationals) have elected to leave the UAE over the past year due to the high cost of living and new work opportunities which have emerged in their home countries. For western expats choosing to leave the GCC, the prime reason cited was the growing weakness of the US dollar and the impact this has had on local “pegged currencies” which has reduced the attractiveness of Gulf salaries against the euro and pounds sterling currencies.

Adel Samir, regional operations manager at regionally-based recruiter Mawaride, points out that companies operating in the UAE are beginning to realise the potential harm in the sharp rise in cost of living and are reacting with salary increases. “With the amount of investment being thrown into the [Gulf] region, companies can afford to raise salaries,” he adds.

Expat demographics

While the amount of income on offer as part of the remuneration package does play a factor in where an expat decides to move, a more important focus emerging in the marketplace is the challenge of the employment position and the dynamics of each company, observes Webster. The same deciding factors tend to come into play across the various levels of responsibility within the company, she notes, but the issue of growth opportunity is more prevalent at the senior management level.

A less “mercenary” attitude by expats moving to the Gulf seems to be confirmed by the GulfTalent.com report: “The drivers of mobility into the Gulf, however, appear to be changing. Many of the newcomers are attracted by long-term aspirations and interesting career opportunities now available in the region, with short-term financial considerations playing a less dominant part in the overall value proposition.”

Samir concurs that lifestyle, particularly in terms of Dubai, plays a greater role than pure financial considerations. “Dubai’s attraction is its lifestyle and good career attractions. You find people here [Dubai] in positions that they wouldn’t hold in their countries of origin. With Dubai, there’s opportunity to excel,” he notes.

What type of people are likely to adopt the expat life? Headhunters focus their recruitment drives in countries where job and income opportunities appear to be limited, observes Samir. As such, Mawaride, which actually focuses on recruiting Arabic people in the West and enticing them back to the Middle East, looks to Europe, the UK, South Africa and Australia as prime markets. Recruitment from North America is not common, he adds, as professionals from the US and Canada are perceived to be too expensive according to the lifestyles they have become accustomed to.

Webster confirms that the US is not a hot recruitment market for the Gulf. This has less to do with regional security concerns, she adds, as opposed to the fact that Americans are subject to taxation (above a moderate exemption) on global income, so Gulf salaries would be less attractive to someone from the US.

Webster believes that both single and family professionals are as likely to join the expat community in the Gulf. Single professionals are, however, more likely to be interested in Dubai’s nightlife whereas family professionals are more drawn to the luxury “community lifestyle” available in Saudi Arabia. And, observes, Samir, “Even westerners are beginning to stay in Saudi Arabia because of the community compound lifestyle. Saudi Arabia is top of the range quality and about saving money.” Webster confirms the growing interest by western expats in Saudi Arabia: “Saudi Arabia is attracting a growing number of professionals, particularly in investment banking. I know people who have moved from Saudi Arabia to Dubai and found it very difficult to adjust because they are used to the compound community where people reach out.”

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