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Tue 19 Feb 2008 12:00 AM

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Salaries fall as inflation rises

Real wages on the decline as salaries fail to keep up with cost of living increases.

Record inflation across the region outpaced the salaries of more than half of Gulf employees in 2007, according to findings from this year's ArabianBusiness.com Salary Survey.

The number of respondents to the survey from across the GCC that stated they saw a decline in their real wage after factoring in inflation was more than three times larger than those who said that their real pay had risen (16%).

Oman, where inflation recently hit a high of 7.6% last year, faired the poorest of GCC states when it came to salary reviews.

The survey indicated only 14% of employees in Oman enjoyed a real salary increase during 2007, while close to one in three people said their salary had fallen as a result of inflation.

Employees in Oman have the smallest salaries of the six GCC nations according to the ArabianBusiness.com survey.

Kuwait, which depegged its dinar from the fledgling US dollar in May of last year, kept inflation in check at 6% last year. Despite that 45% of those polled still believed their salary fell in value in real terms.

Approximately one-fifth of Kuwait's participants in the survey indicated their pay had risen relative to inflation over the same period while one-third believed it had remained the same.

On the whole, the results were worse for expatriate workers in the Gulf than for nationals. In an effort to offset soaring inflation many governments around the GCC awarded generous raises to employees in their public sectors, typically populated by locals.

Even so, many nationals still felt short-changed after adjusting their salaries for inflation. In the UAE, 43% of respondents indigenous to the country still believed their real wages had diminished while the majority of nationals in Bahrain, Saudi and Oman all indicated a fall in real wages (63%, 56% and 61% respectively).
Subcontinent workers fared worse, however. Bangladeshi workers across the Gulf faired the poorest in terms of real salary with three-quarters of all respondents indicating a fall in real wages.

More than half of Indian expatriates working in the UAE saw their real wages diminish during 2007, outnumbering those who saw their salaries rise by more than four to one.

Surprisingly Qatari salaries remained the least effected, despite having the highest inflation in the Gulf at 14%.

Only 20% of respondents from the country said their real wages had shrunk during the past year. Over two-thirds - 70% - of respondents from the country believed their wages had remained in line with their record inflation.

When broken down by industry, the fields of aviation, broadcast and education services were the hardest hit.

Less than one in ten respondents working in education services or aviation believed their wages to be rising against inflation, while two thirds claimed they had fallen.

Those working in the legal field faired far better than any other industry when it came to a pay increase, although one in three still believed their real wages had been eroded last year. The legal profession is also the best paid industry in the region, according to the survey's findings.

Average inflation for the GCC region was estimated to be around 8% for 2007.

If you live and work in the GCC and did not see your pay rise by at least that much last year, your salary declined in terms of purchasing power.

More specifically, if you did not receive a pay rise of 9.3% in the UAE, 6% in Saudi, 14% in Qatar, 4.9% in Bahrain or 7.6% in Oman - your salary was effectively cut.

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