By Staff writer
In the UAE, 28 percent of the organisations have already, or are planning to reduce the base salaries of one or more of their career levels
While businesses in the Gulf region are confident that the economic effects of Covid-19 will be short-lived, most have taken short-term measures to alleviate the impact of the virus.
In the UAE, 28 percent of the organisations have already, or are planning to reduce the base salaries of one or more of their career levels, according to a new report by HR consulting firm Mercer.
The report reveals that businesses in the region have been quicker than international counterparts to react the financial impacts of the pandemic, with 81% of GCC-based firm have made, or plan to make compensation and benefits programme adjustments, whereas 53 percent of internationally headquartered companies have made or plan to make changes.
“Overall, organisations in the GCC are optimistic that the economic effects of Covid-19 will be short lived as a result of stringent measures to contain the virus and stimulus packages offered by governments,” said Nuno Gomes, head of Career at Mercer MENAT.
“With employee wellbeing remaining a key priority, organisations are trying to preserve the financial safety of their lower level support functions by focusing salary reductions at the higher career streams. Furthermore, salary reductions have been mostly within the 15-25 percent range and applied for a short period of time.”
Some of the measures taken by businesses in the Gulf region include suspended or delayed 2020 salary increases, and temporary reductions in base salary and allowances.
A standout trend across the region is that CEO and senior management have taken a significantly higher level of paycut than those at the support level. In the UAE, 81% of CEOs and 89% of senior management have reduced base salaries, with the majority of those planned to be limited to three months.
In terms of headcount, almost 40% of companies across the GCC have or will implement a hiring freeze, enforce permanent terminations or place employees on furlough.
Organisations in the life sciences and financial services sectors have shown to be more resilient to the impacts of Covid-19, with 87 and 58 percent respectively reporting no changes to their compensation and benefit programmes.
At the other end of the scale, engineering, construction and real estate sector (90 percent) and those with diversified operations spanning multiple industries (86 percent), reported taking actions across one or more compensation and benefit programmes.
According to the report, many organisations are also revisiting their leave policies by obliging employees to take paid leave within set time periods, encouraging the utilisation of carry over leave days, or using leave balances to shorten work weeks.
The sample contributing to the analysis is comprised of 168 groups, spanning various industries with their subsidiaries operating across the GCC.