Adnoc bumps employee wages 20%

The increase is substantially above inflation, but much less than the rest of the public sector received earlier this year.

Energy companies in the region have been forced to raise wages dramatically over the past few years.

The National Oil Company (Adnoc) of Abu Dhabi has increased its employees' base salary by 20 per cent, according to an internal memorandum seen by The National. The increase is substantially above inflation, which stood at 11.1 last year, but still much less than the rest of the public sector received earlier this year. Effective at the beginning of this month, the pay rise was "based on a study of the remuneration market in the UAE and the Gulf Region and the need for ADNOC to maintain a more-competitiive position to become an 'employer of choice' locally and regionally," the memorandum said. It was signed by Yousef Omair Bin Yousef, the chief executive.

A spokesman for Adnoc declined to comment, but the authenticity of the memo was confirmed by another employee, who declined to be named. Under the new compensation scheme, the maximum monthly basic income for national executives was increased to Dh102,530 (US$27,000). If the maximum general and housing allowances are added, the maximum total take-home pay for the highest executive level rises to Dh205,674 per month.

The highest basic salary including supplements for a national employee below executive level was Dh63,280. The maximum basic salary including supplements for the same job held by an expatriate was raised to Dh47,790 a month, the memo showed. These figures do not include housing and general allowances, which can reach Dh62,229 for nationals and Dh31,472 for expatriates for that level of employee. Shabti Kumar, a manager at World Wide Worker in Dubai, said the new levels of pay offered to senior executives were still not competitive in the global energy industry.

Rapidly increasing demand for skilled labour, coupled with a shrinking pool of educated workers, has forced energy companies in the region to raise wages dramatically over the past few years. Those that cannot offer competitive wages will likely lose their skilled workers, Mr Kumar said. "When demand is high, and supply is low, the price rises. Companies pay more for skilled people, and in that environment retaining workers become a challenge," he said.

Double-digit inflation in the UAE has prompted many employers to lift workers' salaries significantly, to help them keep pace with spiraling food and rental costs. Last November, Sheikh Khalifa bin Zayed, President of the UAE and Ruler of Abu Dhabi, ordered a 70 per cent salary increase for government employees, effective at the beginning of 2008. "The salary raise is significant because it's a direct, tangible effect of the impact that inflation is having," said Ali Cumber, regional director for Angelou Economics.

Because of the system of visas and sponsorship, the UAE's unskilled labour market is not fluid and lower-paid workers cannot switch jobs even when someone else might pay more for the same work, according to Mr Cumber. In a more fluid environment, employers would have to make sure their workers' income kept pace with inflation in order to stay competitive. Because UAE employers, especially large ones, are less subject to such market pressures, Adnoc's 20 per cent pay rise shows how significant the effects of inflation have been, he said.