When Kathryn Hill was weighing whether or not to accept a job as a geography teacher in Dubai, it was the offer of an apartment in the contract that swung her decision. "I had been living in the middle of Bristol [England], sharing accommodation," she says, "and the package here included my own accommodation, which to me was amazing. It was a big pulling point for me even though I had never been to Dubai and had no idea what to expect. But at that time I just couldn't see any way of getting out of shared accommodation and getting something on my own in the UK. Everything was too expensive and there was just no chance of getting a mortgage." That was 14 years ago. Mrs Hill, now 40, went on to marry a fellow Dubai College teacher. She's now firmly settled in the emirate with her husband, Clive, and two children - Lauren, five, and Mark, three. Over the years Mrs Hill has lived in three buildings provided by her employer as part of her benefits package - two apartments and the villa in which she currently resides. Her employer also pays for medical care, a return flight back to the UK each year for the entire family and school fees for her children. Entirely content in her job, Mrs Hill says her benefits, saving her tens of thousands of dirhams each year, are incredibly important to her family. She's also aware of how generous her package is when compared with those offered by many other organisations in the region. Mrs Hill's outlook on shrinking benefits may be well founded. According to the latest Wealth Monitor report from Zurich Life International, 41 per cent of expatriates in the UAE and 32 per cent of those based in Bahrain are fearful that cuts will be made to their existing benefits packages as a result of the financial crisis. "I have certainly heard that a lot of schools now are giving an allowance rather than accommodation," Mrs Hill says. "Of course, if it's a good allowance then that is fine, but the figures you hear talked about for accommodation allowances seem to be quite small, which means that for people to live in anything in an area they like, or the size of accommodation they like, then they have to top up the allowance out of their salary." Indeed, there is a growing perception, she says, that benefits packages offered to new expatriates are not as generous as they once were. A 33-year-old woman from the UK said her husband, who works in the oil services sector, had recently turned down a higher-paying job because the housing allowance offered would not have covered the cost of an apartment, let alone the five-bedroom house in which they currently reside. The woman, who asked to remain anonymous, has lived in the GCC for six years, and in Abu Dhabi for four. With three children in primary school, another issue for the family was that her husband's latest job offer didn't provide as much money for school fees. His present benefits cover all fees, but the tuition package that was attached to the job offer came with a limit. For example, while for the 2008 to 2009 academic year tuition would have been covered, it would not have been adjusted to the 25 per cent increase in fees expected next year. With education costs always rising, the couple were concerned that they would have to pay the difference themselves. Their situation highlights the importance of taking benefits into account when accepting a job, rather than basic salary alone. "In my experience, fewer and fewer people, unless they are very senior, get the old-style expat packages where just about everything is included," says Keren Bobker, a senior consultant at Dubai-based Holborn Assets Insurance Brokers. So what should you expect in a typical expat package? "The main inclusion is housing, followed by school fees," Ms Bobker explains. "Then there can be a travel/car allowance and medical insurance, plus annual flights. While medical insurance is compulsory in Abu Dhabi, it isn't in Dubai. Good employers, though, will offer access to a company sponsored-medical plan, but this is by no means universal. Only the more comprehensive, and thus pricier, medical insurance plans include dental cover." In addition to her work as a financial adviser, Ms Bobker also regularly sets up employee benefit packages for corporate clients. She says there are many other benefits one should consider before signing an employment contract. "Other possible benefits which we regularly provide as a company include death-in-service schemes - basically, life assurance as a multiple of one's salary - and disability cover, which provides payment in the event that one is unable to work because of an accident. A more expensive, and therefore less popular, option is group critical illness cover, which pays out a benefit to an employee if they are unable to work because of sickness or injury." The "final gratuity" is the most often overlooked part of a benefits package. Originally intended to cover the cost of an expat repatriating to their his or her country, a final gratuity will typically amount to one month's basic salary for each year of service. But not everyone agrees that employee benefits are being cut back. Callum Burns-Green, the principal at Mercer, a consulting group in Dubai, has a different interpretation. Mr Burns-Green argues that there has been a marginal increase in the level of employee benefits in the region over the last few years. However, because inflation has hit double digits across the GCC, and housing costs in particular have risen dramatically, particularly in Abu Dhabi, expatriates feel their benefits are less generous than they actually are. He also suggests that many companies are now more intent on providing long-term incentives. "There has been a great deal of interest in creating a more stable work environment for expatriates, and by that I mean there has been a recognition that high levels of turnover impacts on a business's ability to move forward in a longer term and meet its goals," Mr Burns-Green explains. While companies have traditionally offered high salaries to entice expatriates to stay in the country for at least three to five years, there is a growing trend among employers to focus on pay structures that reward longer service. Mr Burns-Green believes the ultimate aim is to make the typical period of employment in the Emirates between 10 and 15 years in duration. "We can also definitely say that there is an increase in employers offering retirement savings plans, although I would not classify that as a very large interest, as yet," he says. "It is a growing interest, and a number of companies are looking at designing and implementing retirement savings plans in order to develop a more retention-focused rewards strategy. There has also been a gradual increase in levels of life, disability and medical benefits on offer over the past three to five years." There may be other changes to the way we view employee benefits. Although it has been common practice in the West for employers to produce "total reward statements" for their employees, these are only just catching on in Middle East, according to Mr Burns-Green. Such statements assign a financial value to all employee benefits, including pension, childcare cover and health care, thus making it much easier for people to grasp the total value of what is actually on offer, not just the headline salary. So will the global economic crisis impact on employee benefits? Despite the concerns expressed by expats who took part in the Zurich survey, the consensus among advisers seems to be that the jury is still out on what effect the current crisis will have on levels of basic pay, housing and other allowances during the next year or so. According to Mr Burns-Green, the price of oil is a key driver in determining reward levels. At the end of 2008, when the oil price dipped below US$35 (Dh128.50) a barrel, many local companies adopted a "wait and see" policy for 2009 remuneration packages, while several multinationals with operations in the UAE instituted pay freezes. What remains to be seen, however, is what will happen to benefits now that the price of oil has returned to around $64 a barrel. Abdalla el-Badri, the secretary general of Opec, has said he believes that oil will average $75 a barrel by the end of the year. Ali al-Naimi, the Saudi oil minister, believes it could go even higher, perhaps stabilising at $80 a barrel. If the above predictions do not offer a little cheer on the future uplift in benefits, take heart. According to a recent survey by Foreign Currency Direct, a currency dealer, 59 per cent of British workers think they would be better off as expatriates. Almost 40 per cent believed that they would be better paid if they worked overseas, and one in five said they viewed a job abroad to be more secure than one in the UK. So while expats themselves may not think they have it so good, there are plenty of people back home who would jump at the opportunity to live the expatriate life. Looking back over the years, Mrs Hill certainly appreciates the life she has had in the UAE thus far. "I feel we would be worse off if we weren't here [in Dubai]," she says. "If we were in the UK we would be paying a mortgage, national insurance, income and council tax. All of those things eat away at what you have left to live on."
Protect your benefits
Are packages under threat? While some expats feel they are less generous than in the past, there might be positive changes in store for long-term residents.
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