GCC salaries climb by 9%

Private sector salaries in GCC countries grew at an average of 9% over the last year, according to a new study released today.

Oman showed the biggest jump, with basic salaries rising from 5.6% to 11% over the one-year period to August 2007, despite the labour market's extremely turbulent year, figures from the GulfTalent.com survey revealed.

The growth is driven in part by a 15% pay rise for the country's public sector employees, a statement from the Middle Eastern online recruitment firm said.

The pay of UAE professionals increased by 10.7% against 10.3% last year, while in Qatar wages rose by 10.6%, marginally lower than last year's figure of 11.1%.

However with the UAE's rising cost of living exceeding pay increases over the last few years, many expatriates have seen a fall in their net disposable incomes, the report found.

Of the UAE-based expatriates surveyed in the study, 41% reported making no savings on their income, the highest figure in the Gulf.

The company's third annual survey of regional salary trends also showed Bahrain pay rises accelerated to 8.1% from 6.4% last year, while Kuwait was virtually unchanged at 7.9% against 8.0% last year.

Saudi Arabia saw an increase to 7.7% from 6.5% the previous year.

According to GulfTalent.com, the region's salary increases are attributed to continued economic growth and intense competition, as well as spiralling living costs, particularly Qatar and the UAE.

Other drivers of pay increase are large pay rises for government employees and the continuing depreciation of dollar-pegged regional currencies, which reduce the value of Gulf compensation packages for European expatriates, putting further upward pressure on salaries.

"Kuwait's decision earlier this year to drop the US dollar peg and the subsequent 3% appreciation of its currency are increasing the competitiveness of Kuwaiti salaries relative to its neighbours and may intensify the pressure on other GCC countries to follow suit," the report said.

Continued economic growth and rising salaries in India - traditionally the main supplier of expatriate workforce to Gulf countries - is also driving pay rises in the region to retain employees.

Construction, banking and energy sectors saw the highest pay rises across the GCC over the last year. Healthcare and education registered the lowest increases.

Among job categories, engineers and finance staff received the biggest pay rises, followed by human resource professionals in third place, the report said.

GulfTalent.com's study was based on a survey of 18,000 professionals in the six GCC countries, as well as interviews with regional business leaders and human resource managers.