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Pay Rises Likely for UAE Workers Next Year

Middle East : 11 December 2011

Source: Arabian Business

Workers across three Gulf countries are in line for a pay rise in 2012 as companies fatten wage packets in a bid to retain talent, a Mercer poll published on Sunday has found.

Companies in the UAE plan to raise salaries by 5.5 percent while their counterparts in Qatar and Saudi Arabia see pay hikes of six percent, the survey of 300 firms in the Gulf countries found.

But Mercer warned that many companies remained wary of the impact of the Arab Spring upheaval and the potential fallout from the euro zone’s debt crisis on local economies.

“Broadly, economic activity across the MENA region has been solid in most areas but confidence and optimism has been buffeted by pockets of social unrest, in what has been a period possibly unique in the Middle East in the modern era,” said Zaid Kamhawi, of Mercer Middle East.

The survey also found that salary gaps are widening between multinationals operating in the GCC and homegrown firms as the fight to attract and keep employees intensifies.

“In the UAE, local firms pay on average 17 percent more than multinational firms, and it widens towards lower level positions,” said Kamhawi. “On average, base salary payments in the UAE are on par but in terms of allowances, the average difference is 44 percent higher in local firms.”

The base salaries of workers in Abu Dhabi are on average 7.5 percent higher than those on offer in Dubai, while housing allowances are about 21 percent higher, Mercer found.

In Qatar, the pay gap is even wider with local companies paying an average of 43 percent more than multinational companies. On average, the base salary gap is 26 percent and in allowances the average difference is 60 percent.

“This is largely because of the diverse range of allowances local firms pay. Multinational firms offer a range of other elements – many of them not directly linked to compensation – that employees and candidates find valuable and that companies use as tools to attract, retain and develop their talent,” said Kamhawi.

“But the existence of the gap continues to serve as a reminder that the fight for good talent will only intensify in the short term.”

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