By Andy Sambidge
Hay Group report also says challenges remain in retaining Emiratis in the private sector
Average salaries in the UAE are likely to rise by 5.5 percent next year after a 4.9 percent increase in 2012, according to a new report by Hay Group.
Its 2012 UAE compensation and benefits report also said challenges remain in retaining UAE nationals in the private sector remain.
It said the turnover of Emirati staff is double that of expats.
An average pay rise of 5.5 percent is forecast for the UAE in 2013 according to data for almost 237,000 employees from 532 companies and 16 industries mainly within the private sector.
Hay Group’s Harish Bhatia said 85 percent of UAE companies increased salaries this year, with oil and gas and financial services paying the highest salaries.
Hay Group’s report found that UAE nationals are paid an average 44 percent premium above the market. Yet, the turnover of nationals is 14 percent, which is double the turnover of non-nationals.
He added that firms need to look beyond fixed salaries in a bid to retain the best staff.
“Although fixed pay is an important part of the proposition, employers need to think long term about how factors like end of service benefit will impact the business. Basic pay rises are a short term incentive for employee retention but in isolation do not build loyalty or engagement,” he said.
“Our research suggests that more western expatriates are now planning to stay in the UAE for the longer term. They are here for the career experience especially given the bleak outlook of the mature economies in Europe and North America,” he added.
Bhatia said expatriates from emerging markets like China, Korea and India are also starting to demand higher packages, particularly for skilled and technical roles.
"With close to 10 percent pay increases in their home markets in 2011, and again in 2012, they are weighing up the benefits of staying or going,” he said.
It's still not enough. Annual rent prices are too high compared to an average annual salary of an expat in Dubai.