Double-digit salary increases appear to be a thing of the past in the GCC as stable conditions are set to lead to another year of modest wage movements.
Salaries are expected to grow by an average of 5%, based on the forecasts and data we collect from more than 1,600 organisations representing 1 million employees in the GCC. This is an increase from 2014, when average movements were around 4.2%.
The outlook varies between sectors, seniority level and between country nationals and expatriates. Overall, however, we expect modest increases across the board – continuing the trend that we have seen over the past five years.
One of the major challenges faced by our clients is how to maintain internal equity. Organisations are trying to balance market dynamics with global best practice and government policy (which often dictates minimum conditions for country nationals) – and this is proving a difficult task for many.
Our data shows that nationality-based differences exist mainly at the lower levels of organisations and that the gap tends to narrow as roles become more senior. The gap is largest at the entry level where competition for non-graduates for operations or administration roles is fierce. However, nationality becomes less of an influencer as employees move up the ladder in their careers.
Roles that require more experience and specific skills tend to have packages based more on market demand than demographic factors.
What's happening in your market?
The outlook for the Bahrain economy is positive, with businesses forecasting growth and several infrastructure projects starting up. With inflation forecast just shy of 3% and salaries set to increase by 4%, workers can expect a rise in their buying power at a little over 1%.
We expect that Kuwait will continue growing steadily, thanks to sustained inflows from oil exports, rising foreign direct investment and a boost in both private and government consumption. Thanks to these factors, people can expect an increase of approximately 5%.
With inflation under control, businesses forecasting growth and the government investing across sectors, the Oman economy is looking decidedly stable for the 12 months ahead. Employees can look forward to increased buying power, with salaries increasing 5% against forecast inflation of just 2.2%.
Qatar’s GDP will continue to grow at impressive rates in 2015 and, thanks to government investment, the economy will carry on diversifying. Businesses forecast salary increases of 5% in 2015. However, the war for talent – particularly national talent – is sure to have an impact as businesses fight to retain their employees.
We see the pay gap between nationals and non-nationals increasing – except Western expats who comprise a small portion of the market – thanks to the Nitaqat programme and minimum wages for national employees. It is worth noting that the pay gap exists mainly at the supervisory and clerical levels. Across the board, salaries in the Kingdom are due to increase by a healthy 5%.
United Arab Emirates
Salaries increased by an average of 5.7% in the UAE in 2014. Higher than had been forecast, this rate is primarily due to an uplift in allowances in response to higher costs of living – particularly rising rents. Organisations are this year forecasting 5% increases, which mean a real uplift of 1.5% when we consider inflation.