Salaries in Saudi Arabia set to rise in 2021, survey says

Majority of employers in the Arab world's largest economy are optimistic about market conditions despite Covid-19 and expect to increase salaries this year

A man displays his details on his mobile phone using the Tawakkalna app, which was launched by Saudi authorities to track people infected with the coronavirus disease (COVID-19), as he enters the Al-Othaim market in Riyadh, Saudi Arabia February 22, 2021. Picture taken February 22, 2021. REUTERS/Ahmed Yosri

Skilled professionals working in Saudi Arabia are likely to receive a pay increase this year despite an economic slowdown induced by Covid-19 last year, according to new research by global recruitment consultancy Hays.

While 9 per cent of workers in the kingdom experienced a pay cut last year, 39 per cent received a salary rise and 52 per cent said it remained the same, the Hays 2021 Saudi Arabia Salary and Employment report revealed.

However, 53 per cent of employers and 56 per cent of employees expect salaries to increase in 2021, the report, which surveyed more than 600 skilled professionals in the kingdom, said.

“Saudi Arabia has not been exempt from the negative impacts of Covid-19,” Chris Greaves, managing director of Hays in the Middle East, said.

“However, this was largely only during the height of the pandemic and when looking on a global scale, Saudi Arabia’s job market has fared very well.”

Employers in Saudi Arabia, the Arab world’s largest economy, are optimistic about a post-Covid-19 recovery in 2021, the survey said.

The kingdom is poised for a modest economic recovery in 2021, led by the non-oil sector. Business activity in the country's non-oil private sector expanded modestly last month, with the seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers' Index falling to 53.9 in February from January's high of 57.1. A reading above the neutral 50 level indicates an economic expansion, while a reading below points to a contraction.

The kingdom's economy is expected to grow 2.6 per cent in 2021 and 4 per cent in 2022, following a 3.9 per cent contraction last year, according to International Monetary Fund forecasts.

Eighty-one per cent of respondents to the Hays survey said their companies are in recovery, business as usual or growth phases since the pandemic. In contrast, 62 per cent expect business activity to increase in 2021 and 76 per cent plan to recruit additional staff over the next year, according to the report.

While many organisations in the kingdom will remain cautious on workforce spending, 53 per cent of employers said they will award pay rises of up to 5 per cent to employees in 2021.

“We have certainly witnessed growing confidence in the market since the last quarter of 2020,” Mr Greaves said.

“While organisations will want to keep a lid on pay increases in an attempt to recoup some of the financial losses made in the past year, we expect this optimism to translate in a higher number of pay rises in 2021 than were awarded in 2020.”

The busiest sectors for hiring include life sciences, healthcare, manufacturing and real estate. Automation and digital transformation remain key priorities for many companies, which will also see high demand for IT and tech professionals in the kingdom.

Higher salaries will drive 44 per cent of professionals to move jobs in the next 12 months, boosted by the government’s Iqama reforms, which come into effect this month and allow workers to change jobs without the consent of their employers once their contract ends.

“We expect mobility of labour to be higher than previous years with professionals being more willing to leave an organisation based on pay offered by another. Employers will need to be competitive with salaries, paying more than others to secure the top talent,” Mr Greaves added.

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