A survey of salary trends in the GCC has revealed an average Gulf-wide salary increase of 7.0 % over the one-year period to August 2005. Qatar leads the group with a 7.9 % increase, followed by Saudi Arabia with a 7.4 % increase, Kuwait with 6.9 %, UAE with 6.5 %, Bahrain with 6.3 % and Oman with a 5.9 % increase. 

The report entitled "Gulf Compensation Trends 2005"  based its findings on a survey of 3,000 professionals across the GCC, by GulfTalent.com, one of the region's online recruiting agencies. It provides a strong indication that the rising inflation and increases in public sector pay packages are finally having an impact on private sector compensation. According to the report, the sectors enjoying the best compensation package improvements in the region are banking & finance, construction and real estate. The lowest pay rises were reported in healthcare and education.

 Average pay rises also varied by nationality. Salaries for Asian nationals grew fastest at 7.4%, driven by growing opportunities in their home countries, particularly India. Arab nationals had the next highest increase with 6.8%, while Western expats had the lowest average increase at 5.1%. Overall, the gap between Asian and Western salaries is narrowing, said the report, with several companies reporting that they no longer take nationality into account when assigning salary increases.

 "An increased cost of living is of course the top reason why employee compensation packages in the region are rising," said Suhair Ajjawi, Executive Recruitment Manager at Ernst & Young in Bahrain, "However, we have not seen any major increase in Bahrain - the change is actually more in how people perceive moving and working in other countries than in the compensation packages."

 People in India and Pakistan who were eager to take up GCC jobs in the past are today more interested in going West where they have better career opportunities and the option of taking up citizenship and putting down roots in the long run, she said.  

"If there is no opportunity for substantial savings, professionals are just not interested anymore in coming to the Gulf," she said, "It is not like the "seventies and "eighties when people were willing to work their way up the pay scale."

 GulfTalent.com's earlier research released in March had indicated a limited rise in UAE salaries, despite massive increases in rents.

 All these developments have sent HR managers across the region into what the report characterises as "a frenzy of activity" as human resource departments rush to calculate appropriate pay increase levels for their organisations. Multinationals, especially, are scrambling for accurate data to compute new pay scales since they have to deal with head offices in other countries and tough internal policies that demand sound data inputs for every decision.

 The report predicts that salaries will continue to rise over the next year, noting that higher salaries may in turn lead to further inflation as employees with bigger paychecks spend more money. If the trend continued in the long term, the report said, the growing costs of operating in the Gulf may force some businesses to relocate elsewhere, or to outsource their non-customer-facing operations to other cheaper parts of the world.

 Although the report anticipated that the higher cost of staff would encourage companies in the region to invest more in recruitment and training of Gulf nationals, particularly women, whose participation in the workplace has been the lowest, recruitment professionals are seeing mixed trends.

 Source: GulfTalent.com