What the real outlook for your salary is this year

While some reports claim all employees will receive an uplift, one study says less than half of GCC residents will secure a pay rise

According to Hays Gulf Region, employees in the UAE and wider GCC are having "a polarised experience" on salary increases, with some faring very well and others not seeing much change from year to yeaShow more

We’ve all read the headlines telling us we are in line for a hefty pay rise this year. But how many will actually secure such a generous increase?

According to the latest Salary and Employment Report 2019 from recruitment consultancy Hays Gulf Region, market trends indicate that less than half of us are benefiting.

The study found 51 per cent of the respondents polled in the fourth quarter of 2018 saw their salary change last year – a similar figure to the 48 per cent that reported increases in 2017 and 2016.

However, examine the figures more closely and while four out of 10 people reported an increase in pay - the majority by more than 5-10 per cent - 9 per cent actually said they were on a lower salary in December 2018 compared to January 2017. The survey polled 1,700 employees and 700 employers across the GCC.

Chris Greaves, the managing director of Hays Gulf Region, says he often hears commentary claiming salaries for the regional workforce will rise by a certain percentage, such as 5 per cent, in the year ahead – indicating that an annual uplift is the norm.

“Our research shows that this is simply not happening and it hasn’t been happening during the four years we’ve been doing these reports,” he says.

Instead, he says employees in the UAE and wider GCC are having “quite a polarised experience, with some people doing very well at a salary and benefits level and a significant part of the workforce moving from year to year with not much happening”.

The difference between forecast salaries and what people are actually getting paid comes amid a slew of salary forecast reports released in the Emirates over the last few months.

In November, for example, global consultancy Mercer said salaries in the UAE are projected to increase by 4.8 per cent across all industries in 2019, as the job market heats up amid the government's diversification efforts. In January, global consulting company Korn Ferry said wages are expected to increase by 3.9 per cent in the UAE, with inflation-adjusted salaries rising at 0.7 per cent.

And last month's study from LinkedIn on recruiter sentiment found that 56 per cent of recruiters said their candidates demanded higher than average salaries during April to December last year compared to the same period in 2017.

But while candidates may demand higher compensation, whether they secure them is another matter. According to the 2018-2019 Salary Survey and Review from Gulf recruiter and training institute Nadia Global, the average age of the UAE workforce is now under 30 and packages are becoming all-inclusive, meaning "the days of highly inflated salaries and subsidies to cover living costs ... are now a thing of the past".

While Nadia Global recommends employers award pay increases of 3.5 to 5 per cent in 2019 – a figure that factors in inflation – Ajay Malhotra, the company's chief executive told The National last month that whether employers act on their advice is their choice.

This is reflected in the Hays report, which analyses the data of professionals earning between Dh12,000 to Dh70,000, across the GCC, with three-quarters of the responses coming from the UAE.

The study found only 8 per cent of employees received a pay rise that was part of a company-wide increase, with those raises averaging less than 5 per cent.

Mr Greaves says this clearly indicates that those obtaining an increase are doing so through their own endeavours.

“It’s what they are doing themselves: chipping away, asking for a pay rise, getting promoted, having some kind of contribution at work recognised in some way. Or they’ll be changing jobs and getting a pay rise from that. And a small number might benefit from a small, across the board pay rise from those organisations that can afford it.”

For the 9 per cent that reported a lower salary, Mr Greaves says situations where employees lose their jobs may force them to take on a new role that pays less.

When it came to hiring, 2018 was less active than 2017 with 32 per cent reporting a headcount increase, down from 41 per cent the year before. This is due to low energy prices affecting how companies recruit and retain talent, with selection processes becoming more rigorous and more roles now offered on a contract rather than permanent basis, the report concludes.

In turn, Mr Greaves suggests companies are still finding trading conditions tough, and for these organisations managing their cost base is a top priority.

While it appears the best way to secure a pay rise is to leave your company, 46 per cent of those polled stated that career development was their reason for switching jobs.

“Salary is not the prime motive offered to us as a reason for someone moving jobs – it’s more career orientated,” says Mr Greaves. “People are feeling a lack of opportunity in the company they are in. They want to expand their experiences and work on different projects, become more skilled but then as a consequence of that they think 'look there’s no point me moving jobs and doing that on the same salary',” he says.

Mr Greaves says rises for those moving jobs range from a 10 per cent drop in salary to an increase of 50 per cent.

“It’s up to the individual to read the particular circumstances and decide if they are confident enough to negotiate,” he says, adding that a rise of 10 per cent is a realistic expectation or “more if you are confident you have a very niche skill set or sector experience that is in short supply”.

Those with the best negotiating power, he says, are candidates looking for sales positions and those whose skills can contribute to the country’s digital transformation.

“We are recruiting for a number of high-volume digital transformation projects and they are hiring a lot of people from outside the region – pulling people form Europe and the states that have experience that does not exist here in the region,” says Mr Greaves.

“The whole digital and technology area is very busy and if you are in those markets there is a better chance that you are going to have an increasing salary over the course of the next year or two.”

In the construction sector, the focus has shifted to Saudi Arabia where the kingdom is going through an economic overhaul to develop its non-oil economy including the tourism sector. Work started on its mega Red Sea Project last month, for example, which includes a nature reserve and heritage sites and spans about 50 islands.

“We are not seeing a lot of recruitment activity within the UAE and other than Expo 2020 there is not a lot of major projects around that are hiring in big volume. All the interest is shifting to Saudi Arabia – the Red Sea development and all the major urban development programmes, " he says.

"That’s where senior construction managers and directors are very interested in being hired because the projects are of such a size and scale and international renown that they are career enhancing as well as offering secure employment for a period of time on good packages."

So what it the outlook for 2019? While the study found 67 per cent of employers expecting to hire additional staff during the year, and 70 per cent of employees expecting an uplift in salary, the Hays report concludes that given recent trends this expectation is “unlikely to be realised”.

“A lot of the workforce will find that there is no pay rise again and of those people securing an increase in salary – a large percentage of them will do so on their own endeavours," adds Mr Greaves.