Mercer study shows growing confidence in Gulf economic outlook for 2013

In total, close to 500 firms across various industries were surveyed, with results forecasting a rise in salaries by 5% in the UAE, 5.6% in Qatar and 6% in Saudi Arabia during 2013. Anticipated pay increases during this period are expected to remain above forecasted inflation rates - 1.7% in the UAE, 4% in Qatar, 4.4% in Saudi Arabia - generating real pay growth for the working population.

Aggressive recruitment strategies are expected to be put in place, with 60% of companies surveyed looking to increase headcount by the end of the year, and 70% of firms aiming to do the same in 2013.

Zaid Kamhawi, Mercer's IPS Business Leader in the Middle East, said while the results represent good news for the Gulf's positioning relative to other parts of the world, companies are still cautious about the impact of regional and global events on local economic activity.

"Broadly, economic activity across the Gulf region has been solid in most areas but the social, political and economic transformation under way in some parts of the broader MENA region mean that business leaders are still exercising caution," he commented.

"Multinational firms, headquartered in Europe or the US and with Middle East operations, perceive the MENA region as a bright spot for investment and of their key growth regions," Kamhawi said, "As a result of this, and as we tend to see in emerging markets, companies are competing to attract and retain valuable talent in the foreseeable future. The study shows, multinationals with a presence in the UAE are paying up to 13% more than local companies in terms of base salaries."

Efforts to attract and retain local nationals remain constant across the UAE and Saudi Arabia but are expected to rise in Qatar, with a 10% jump in the number of respondents reporting the implementation of active nationalisation policies within their firms.

Data from last year's Total Remuneration Survey showed that consumer and durable goods sectors led the way in salary increases, a trend set to continue in 2013, along with a similar rise within UAE-based technology firms.

In the UAE, predicted salary increases amongst employees holding executive positions are highest in the Energy sector, whereas those in managerial and lower positions will see higher increments in the consumer goods sector.

He continued, "The consumer goods industry is highly driven by retention strategies and the provision of monetary incentives as a means of acquiring employees with a specific skill set, particularly for mid-level sales positions. This an area in which we expect to see a slightly higher salary increase."

"Even more promising, is that the salary increases we anticipate in the region are higher than what we see in developing countries and above inflation."

"This is a clear reflection of the growth expected by Middle Eastern companies and an indication of their need to retain quality talent," concluded Kamhawi.

The annual Mercer survey covers the complete range of sectors from consumer goods, energy and technology to durable and manufacturing. It highlights compensation trends from top executives to the administrative level and accounts for more than one hundred countries globally and covers over 500 benchmark positions.