By Staff writer
New forecast says regional salaries increases after inflation will be 2.3%, with UAE lowest at 0.9%
Salaries in the Gulf region are forecast to see average real increases of 2.3 percent this year, lower than the global average, according to a new report by Korn Ferry Hay Group.
Globally, workers are expected see real wage increases of 2.5 percent - the highest in three years - as pay increases combine with historically low inflation to leave employees better off.
In the Middle East, Korn Ferry delivered a more sombre forecast as businesses focus on driving profitability by minimising their fixed costs, including salaries.
In GCC countries, its report said workers can expect a real wage increase of 2.3 percent, the lowest of these being the UAE where salaries are expected to increase by 0.9 percent, once inflation is taken into account.
Vijay Gandhi, regional director for Productised Services at Hay Group said: "As 2015 draws to a close we can look back on a year of continued growth in GCC. However we have seen a gradual slow down, due primarily to lower oil prices which have impacted the economies in our region."
He added: "There is a definite feeling of slowdown in the market with around 15 to 20 percent of companies now suggesting that they will introduce a pay freeze for 2016. We are already seeing some corrections in some key sectors including Real Estate, Luxury Retail, Financial Services and Oil and Gas Services.
"There is no doubt that there is a cloud of cautiousness in the UAE as businesses focus on restricting increases in fixed costs (including through the payroll), improving their profitability and top line revenue and restructuring to gain higher efficiency from their current staff.
"In addition to lower pay increases, we're expecting this to result in lower bonus pay outs than recent years," said Gandhi.
In the Middle East, Jordan (5.3 percent) is among the highest of real wage increases, with the UAE set to see the slowest real wage growth (0.9 percent), down from 2.8 percent last year.
The report said executive talent is still in high demand across the GCC region with a shortage of key talent at the C-Suite level. Gandhi said that businesses looking to retain their top employees are emphasising long term incentive plans and creating enterprise value schemes that reward leaders over the longer term.
"Long term incentives drive alignment with corporate goals and reward high performance. Our data shows that the fixed pay of executives is broadly competitive with the UK, Europe and Australia; however the total variable pay received significantly lags behind these markets. Going forward, we will see a bigger proportion of total executive remuneration at risk than we see today," he added.
Average real wages increases published in the report are based on 73 countries.