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Wed 23 Sep 2009 11:36 PM

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UAE cos hold line on bonuses - survey

Bonuses, incentives still a regular feature of the corporate landscape, despite global economic downturn.

UAE companies continue to hold the line on bonuses and incentives, despite the global financial crisis continuing to impact the local economy, according to a survey from ORC, the HR consulting business.The 2009 SIRS Middle East Benefits Policies & Practices, United Arab Emirates survey found more than 75 percent of firms polled continue to maintain bonus plans for employees at managerial level.

Also of note, 28 percent of companies have confirmed some form of long-term incentive plan in place for employees - a benefit not typical for employers in the region. This year, 54 companies representing a total of 31,000 employees participated in the survey.

''Given the economic conditions of the last 12 months, we may have expected companies to be cutting back on housing allowances, schooling support or medical insurance benefits, but we are not seeing those kinds of measures,'' said John Macdonald, managing director at ORC Worldwide.

''Quite sensibly, companies appear to be trying to do the best they can for the people that are still employed,'' he added

For example, the cost of providing children’s schooling support continues to represent an increasing burden on employers.

The survey found that the median cost of schooling support for local non-national managers was approximately $10,000 per child per year. Not surprisingly, this benefit is much more prevalent at the senior management level than elsewhere in these organisations.

Meanwhile, the UAE has seen continued growth in the provision of private medical insurance coverage, with approximately 80 percent of companies now providing this benefit at management level, and 50 percent providing it for support staff. A similar pattern emerges regarding life insurance benefits. However, the provision of retirement or savings plans was less common.

''We are seeing some growth in the take up of retirement and savings plans in the UAE, but clearly not on the scale seen in many other parts of the world,'' said Macdonald.

''The primary reason tends to be the good protection offered by UAE labour law in terms of the end-of-service gratuity to which all employees are entitled upon leaving their companies.''

Generally, such end-of-service gratuities for eligible employees are equivalent to 21 days pay for every year of the first five years of service, 30 days for every year thereafter. The gratuity is capped at two years’ pay.

More than three-quarters of the organisations participating in ORC’s survey were multi-nationals.

Covered employees included both ''local nationals'' (local residents employed by the company in their home country) and ''local non-nationals'' (individuals employed locally who are not natives of the host country). The survey did not cover those on expatriate assignment conditions.

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