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Sat 17 Oct 2015 01:03 AM

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Qatar salary increases 'negligible' amid 3.5% inflation rise

Hay Group report says salaries across Qatar have increased by an average of 4.2% this year

Qatar salary increases 'negligible' amid 3.5% inflation rise
Currency from the Gulf state of Qatar, a Qatari Riyal sits with a U.S. dollar displayed for a photograph in Dubai, United Arab Emirates, on Wednesday, Nov. 21, 2007. Gulf Arab states may fail to keep consumer prices in check by revaluing their currencies against the dollar, according to strategists at HSBC Holdings Plc and Citigroup Inc. Photographer: Charles Crowell/Bloomberg News

Salaries across Qatar have increased by an average of 4.2 percent in 2015 - lower than the five percent, which was forecast last year before the fall in oil prices.

According to Hay Group, inflation has risen to 3.5 percent with increases in rent affecting the overall cost of living. As a result, the real growth in employees' spending power is a negligible 0.7 percent.

Hay Group's annual Compensation and Benefit Report for Qatar is based on the analysis of salary and benefits data from over 212 companies in Qatar, representing approximately 115,000 individual employees. 

It said volatile global markets and lower oil prices have not had the same level of negative impact in Qatar as in other regional markets.

Harish Bhatia, regional manager at Hay Group, said: "Companies across the GCC are treading with caution and we foresee a more conservative approach to both general spending and future investment plans in both private and public sector organisations in the coming year.

"However, we are yet to see any significant impact on typical indicators such as recruitment activity and compensation review plans."

He said about 92 percent of companies paid the performance-based target bonuses for their employees this year, relatively high by global standards.

As the GCC's fastest growing economy, the outlook for Qatar is positive and organisations aim to achieve their targeted growth, making it likely that employees across levels can expect to increase their performance based pay in 2016, he added.

Although, cost of living increases have stabilized over time, some costs, in particular rental and educational costs, has prompted some organisations to review their allowance policy, Hay Group said.

A quarter of the 212 companies participating in the survey said they are looking to increase their housing allowances by an average of 8 percent in 2016. These are companies that haven't made changes in the last few years and are catching up with the current market conditions.

Over 50 percent of the employee population included in this study have been with their current employer for over five years, representing signs of increased stability when compared to previous years.

Bhatia said: "In the past, we have seen high levels of fluidity in the market with staff moving quickly from one job to another. Increased investment in training and development for both national and expatriate employees is helping organisations retain their staff over the longer term."

Despite the positive outlook, the research also showed that organisations are looking to cut costs with many focusing on training and development budgets.

Bhatia said the approach is not sustainable over the long term: "In order for Qatar to develop its future leaders and achieve its goal of becoming a knowledge-based economy, organisations need to train and develop their employees.

"The cost of replacing staff can equal up to eight months' salary, so companies simply must find alternative ways to maintain profitability in difficult times and cut down on development costs."

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