The Arabian Gulf has high starting salaries, but don’t expect a bonus

A report shows a drop in companies boosting employee salaries in the region

The Arabian Gulf has high starting salaries, but rarely are there pay raises or bonuses. Alan Diaz / AP

Base salaries in the Arabian Gulf remain the highest in the world for certain positions, but there has been a decline in annual pay raises for two years, according to research from recruitment firm, Korn Ferry Hay Group.

The report on compensation and benefits trends said a quarter of surveyed companies in the UAE awarded pay rises to less than half of their employees, a trend that carried over into Saudi Arabia and Qatar.

More than 2,600 companies, located throughout the GCC, Egypt, Jordan and Lebanon, were surveyed on compensation and benefits trends. Nearly half of those surveyed were from the UAE and Saudi Arabia.

"Bonus payments have been in decline since 2015 and we suspect the trend to continue into 2018," said Vijay Gandhi, regional director at Korn Ferry Hay. However, focusing on fixed-pay has turned into a long-term problem as the region faces an economic slowdown.

When the region faces a slowdown, businesses are forced to work on tighter budgets. This leads to a decline in the amount of pay increases awarded to employees. Korn Ferry Hay said that historically, the business community in the region has tracked inflation as the key factor for increasing salaries.

The report said that 30 per cent of organisations issued pay hikes for a select group of individuals compared to over three quarters of the organisations between 2009 and 2014, which the recruitment firm said was unsustainable. “The increase in total payroll costs are at 2 to 3 per cent; however, by issuing salary increases to high performers, high potentials or employees who are promoted, organisations can issue considerable increases but to a smaller population in the organisation,” the report said. “The reality of managing talent with limited budgets has begun to sink in as we see the shift towards businesses selectively rewarding high performing employees through bonus schemes and performance related pay rises.”

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Recruiter Hays said that it has seen regional salary rates remain largely the same over the past two years. "This is largely owing to the sustained low energy prices, resulting in organisations now being more cost conscious with regards to their remuneration structures," said Chris Greaves, managing director of Hays Gulf Region.

Hays has also seen the trend of growth in the number of individual performance-related pay rises, rather than company-wide hikes.

Yet more employees are turning to new jobs in order to gain higher pay cheques, according to Mr Greaves. “However, the employment market is incredibly competitive amongst candidates and job security is therefore playing a bigger role when considering whether to change jobs,” he said. “Where employers will pay more is for highly skilled and experienced candidates who they can be sure will add value to their organisation and ensure that they meet their business objectives.”