Gulf executives should see their base salaries hiked in 2011 to meet the international trends with increase of between 6 and 7.5 percent, according to a new study.
Mercer’s Middle East Market Leader Cameron Hannah stated that the firm’s survey forecasts an increase in base salaries for 2011 of around 6 to 7.5 percent and this is likely the first salary increase many have seen in over two years.
Bonus plans have been deferred, the performance measuring and targets of businesses have been more rigorous and profit-linked incentives are more common based on the findings of Mercer’s 2011 review. Mercer noted in the survey report that these GCC trends indicate that the time lag for the remuneration of executives when compared to those in North America and Europe is beginning to close rapidly.
Hannah noted that as the economic activity strengthens, some companies in the financial services sector and other sectors have begun to change their strategies for paying key execs and attracting talent with rich potential.
He noted that the trend seen most often in the GCC is to link the annual incentives tighter to specific corporate performance measures and those within the divisions and units of the firm, as well as looking at long term incentive plans. Hannah stated that in Mercer’s view the companies need to validate their current payout terms while taking specific achievements in performance and long term objectives of the business into account.
The survey report said that the deferral of bonuses, a trend seen globally, has made its way into the GCC with long-term incentive plans being introduced by the businesses without increasing the overall incentive pools.
Analysis was based on remuneration data for the senior executives of 38 of the top banking, financial services and insurance companies across Western Europe. Most of the organizations plan to increase salaries in 2011, with a 2.5 percent average increase going along with the standard annual review. Over the last two years nearly all of the financial services firms have altered their compensation programs and measures of performance. Many have brought in a compulsory deferral plan.
Continuing revolts seen in certain countries in the area, and the threat of more to come, could see many professionals flee to the Gulf region and cause a flood in the job market that drives down the salary rates.
If the upheavals are sustained it could result in an increase of Arab professionals flooding into the Gulf in search of careers, which will push the salaries downward. On the other hand, if the revolts continue to receive intense media coverage from global news agencies it will discourage those professionals in the West from moving to the region, causing a drain in the pool of talented professionals.Paul Holdsworth, Staff Writer, Gulf Jobs Market News