Compensation gap between multinationals and local organisations in UAE is narrowing

"While results continue to show considerable differences between compensation in local and multinational organisations, and across industries, the gap is narrowing," says Aman Merchant, Chief Executive Officer of Paradigmz, Mercer's exclusive strategic alliance partner in the region. "Detailed compensation information is an important tool for companies to make critical compensation decisions in increasingly competitive markets. The 30% increase in participating companies over last year is a testament to the contribution the survey process, data and tools make to organisations committed to attracting and retaining key people."

Results from the 2004 survey were unveiled last week to senior human resource professionals and government officials at Knowledge Village, Dubai. Some highlights of the presentation:

• Average total compensation increased only 5.0% for Senior Managers, compared to the 7.7% increase that was forecasted in 2003.

• Individual performance is the most common criterion for salary increases (98% of the organisations responding) followed by company performance (80%). The majority of respondents (60%) pay bonuses based on both criteria. Even considering the challenges with increasing rental costs in the UAE, only 38% of respondents quoted cost of living as a basis for salary increases.

• In terms of remuneration mix, there is generally a higher emphasis on variable pay, being at the highest level in Hi-Tech companies. However, variable pay has become more important for local organisations this year vis-à-vis 2003, especially at the senior management level, where the ratios are closing in to MNCs.

• Long term incentive plans are no longer the domain of the multinational corporation. Local companies have started to offer them on a limited basis, but mostly for higher positions.

• Interestingly, the data reveals that the gap between local organisation compensation at senior levels and that of multinationals is narrowing.

Data for Mercer's Total Remuneration Survey was collected from 8200 jobs, in 61 leading governmental, private and multinational organisations across the UAE. Sectors represented in the survey include Banking, Industrial, High-tech, FMCG, Oil & Gas, Advertising, Automobiles, Government, Retail, and Construction.

Mercer's Total Remuneration Survey is far more than a traditional compensation or benefits survey. It enables companies to value each component of compensation individually and in turn, to confidently compare their pay and benefit levels against industry benchmarks both locally and globally using Mercer's interactive PayMonitor tool.

Expanding its reach in to other GCC countries, Mercer's first Total Remuneration Survey for the Kingdom of Saudi Arabia is currently underway.