By Sam Bridge
Mercer's Total Remuneration Survey shows largest Saudi salary increase is likely to be seen in the life sciences industries next year
Average salaries in Saudi Arabia have increased by 4.5 percent this year and are forecast to rise by a similar amount in 2020, according to Mercer, a global consulting company.
Its annual Total Remuneration Survey of over 472 companies in the kingdom revealed the annual salary increase is forecast to grow a further 4.5 percent next year, with the highest increase shown in the life sciences industries at 5 percent.
While forecasts vary across specific industries, the strongest push is likely to come from the life sciences and high-tech industries while the energy industry continues to see some of the lowest increase in salaries with a projected 3.5 percent increase in 2020, compared to a 3 percent increase this year.
Mercer said companies are providing higher increases to executives and managers than they are to other employee levels, signalling increased focus on leadership skills.
Basem Samara, career products leader, Mercer in Saudi Arabia, said: “It is very encouraging to see that a large segment of Saudi employers are looking to increase salaries in 2020.
"This is a reflection of a resilient and optimistic economy. Saudi is constantly looking at new approaches to further progress and develop the workforce. In addition to annual increases in base salary, we have noticed an increasing number of talented Saudi youth being placed in leadership positions. This is key in creating a sustainable economy.”
Overall, inflation and unemployment rates in Saudi have continued to decline creating a positive impact on the kingdom’s GDP growth, which is forecast to steadily increase in the coming year.
Mercer said voluntary turnover rate has increased to 9 percent in 2019, from almost 7 percent in 2018, demonstrating an active job market.
According to the survey, the overall hiring outlook in Saudi is also positive with 52 percent of respondents planning to increase their headcount and 38 percent looking to maintain headcount in 2020.
“With a young demographic, there is a significant amount of movement in jobs in the Saudi workforce. To ensure business continuity, organisations must build attraction and retention mechanisms that cater and are tailored to these demographics. We are seeing that leaders of many organizations are looking to enhance the employee experience as a retention tactic given the fierce competition for talent in the market," said Samara.
"The contractual agreement between employers and employees will always have a significant weight, however, this is no longer sufficient. Employers must consider how they are perceived by their employees as an enabler to fulfill their professional and personal ambitions. This is crucial in keeping young talent engaged and motivated and will play a role in driving performance,” added Samara.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.