Gulf salary increases to be subdued in 2018, report finds

New compensations and benefits report from Informa finds that over 10% of GCC companies expect salary freezes this year
Gulf salary increases to be subdued in 2018, report finds
By Bernd Debusmann Jr
Mon 26 Mar 2018 09:23 AM

A large number of GCC companies plan to implement only small salary increases in 2017, according to a new 'compensations and benefits trend' report from Informa.

In the report, Informa found that 20.96 percent expecting to give increases of only 3.5 percent or less, with another 10.51 percent of companies saying they expect to implement pay freezes and 3.36 percent saying that they will likely be forced to reduce salaries.

Similarly, fewer companies are willing to experiment with adjustments to their healthcare provision packages or with wellness programmes, the report found.

According to Informa, the report also found that the implementation of value-added taxes (VAT) is “adding caution” to the compensations and benefits landscape in 2018.

Of the total, 58.58 percent of companies said they won’t consider VAT when deciding whether to implement salary increase, compared to 14.48 percent that said it would be an influencing factor and 29.96 percent who said they were still undecided about the impact of VAT.

Notably, in 2017 the state of salary increases was significantly better than previous survey respondents had predicted, with 56.15 percent of respondents – 251 companies – saying they gave salary increases of 3.5 percent or lower, up from the 31.3 percent who predicted they would do so.

Similarly, 15.88 percent of companies gave increase of 4 percent or more, almost double the amount that predicted they would, and 10 percent gave increases of 10 percent gave an increase of 6.5 percent, more than double the predicted 4.1 percent.

Additionally, the report found that attrition rates have been much higher at the beginning of 2018 compared to early 2017, with only 38.26 percent of respondents claiming attrition of rates of 4 percent of less – compared to 52.2 percent last year – and a 19.24 percent increase in the number of companies suffering 10 percent or higher attrition rates.

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