Changing expectations of pay in Jordan, says Hay Group

Hay Group's Farhan Mahmood who worked on the report says that the unique characteristics of the Jordanian market are having an impact on salaries at all levels of seniority and that the picture in Jordan contrasts with that of neighbouring markets: "There is more than a simple supply and demand equation at work in the Jordanian labour market with unionisation, economic policy changes and inflation creating a degree of turbulence in the market."

Whilst Hay Group reports an average basic pay rise of 5.7% over the last 12 months, the consultancy's forecast of an average 5.3 per cent pay increase in 2013 may have to be revised given recent economic policy changes. New policies in Jordan that included reduced fuel subsidies will impact on the price of basic commodities in the coming months. Hay Group reports that any resulting inflation will in turn push up salaries as employers strive to compensate for the cost of living. This is a similar situation to that witnessed in Jordan in 2008.

According to Hay Group, another dynamic unique to the Jordanian market is a trend in the seniority of those receiving pay rises. In other Middle East markets, including the GCC countries, the largest pay rises have been given at the senior level this year, closely followed by mid level managers. The picture in Jordan is the reverse with the majority of pay rises being awarded to more junior and entry level employees.

Mr. Mahmood commented: "The action taken by unions in Jordan earlier in 2012 has undoubtedly had an impact on pay in the Kingdom. In both 2011 and 2012 the pay rises for senior management have been lower than for clerical and junior level employees. The unions this year called for increases in wages for those at the lower end of the spectrum who earn in the 300 to 800JD per month bracket and these employees have been more generously rewarded with pay rises this year in order to offset the rising cost of living. We have not seen pay rises of this magnitude at the senior levels, hence it is more of a correction rather than a response to supply and demand of labour, or an improvement in business performance."

Pay rises in over the last 12 months for senior management averaged at 1.9%, for mid-level managers 4.7% while clerical and junior roles received an average rise of 7.1%.

Mr. Mahmood concluded: "Some companies we work with are already discussing how to approach the immediate short term, the next two to three months. The removal of subsidies is affecting the labour market leaving employers to face the challenge of how to adequately compensate employees at the lower end of the pay scale for the increasing cost of living. It's a balancing act; there is more to pay than recompense for cost of living and inflation. Pay needs to carefully take into account business and individual performance too and this is what employers are trying to resolve."