Next year is too early for significant salary increases, predicts study
Author: Kirsty Tuxford | Date: 3 Aug 2016
The price of oil needs a hefty boost to take wages with it across the GCC; 2018 named as more promising economically
Salaries will not rise significantly until 2018 and will require a hefty hike in the price of oil to act as the catalyst, according to research from recruitment consultancy Cooper Fitch.
Its study of the market contradicts predictions made by Willis Towers Watson in its Salary Budget Planning Study, that salaries would rise by around five per cent in 2017.
Willis Towers Watson’s prediction that the UAE and Saudi Arabia could see salaries rise 4.6 per cent and five per cent respectively next year is being treated with caution by Trefor Murphy, founder and CEO at Cooper Fitch. “All of the in-country markets are still quite soft, and until we see the key commodity of oil get above at least a break-even-point of $60 a barrel, this is set to continue,” said Murphy.
Employees are having to work harder in order to receive a pay increase and can no longer take an annual rise for granted, Murphy said: “We do see pockets of growth in certain segments, which likely means salary increases, but these are still only across small segments and will not affect the mass population of professional workers across the GCC. The current market is allowing for salary increases, but these are purely based on exceptional performance.”
Cooper Fitch predicted a change in either Q1 or Q2 of 2018. “This is a much more likely time for salary increases, though it is too far away to predict actual percentages. However, we do believe it could be high single digits,” he added.
In terms of the sectors most likely to see a pay increase, Willis Towers Watson’s research revealed that pay growth could be greater for certain skilled jobs with a smaller talent pool, such as digital professionals.
And the sooner the better for both employers and workers, said Laurent Leclère, senior consultant and data services lead for the Middle East at Willis Towers Watson. “There are many factors that affect employee attraction and retention such as the work environment, the managers they work with or health and insurance programmes,” said Leclère. “The top-most factor, however, is the compensation.”
Inflation in the UAE over the past two years has averaged four per cent, however this has coincided with an increase in pay for employees across all industry sectors. Inflation in KSA this year is estimated at 4.7 per cent, an increase from last year, when it hit 2.2 per cent. The hike in pay for employees across all industry sectors in Saudi Arabia in both 2015 and 2016 was five per cent.
The economic outlook, meanwhile, is improving, according to some measures. Analysis based on findings from Emirates NBD’s Economy Tracker Index shows growth in the UAE’s tourism and retail sectors in June, but this has not yet resulted in increased employment, as organisations remain cautious about hiring. Findings show that the job market in the GCC remains stable, with Euromonitor agreeing the tourism sector will continue to grow.