Mercer's inside look at rise in Middle East pay

This study coincides with the Salary Movement Snapshot, which tracked pay plans of 570 multinational organisations operating across 76 countries in EMEA. The data provides information from multinationals on median base pay increases across all employee groups including 'blue' and 'white collar' workers up to management and the Senior Executive level.

The Middle East and Africa has the largest variation in forecast pay increases due to the diverse nature of the region. Companies in Morocco (4.9%), Tunisia (5.3%) and Algeria (6.8%) are predicting high pay increases to employees compared to those in Western Europe, while employees in Egypt and South Africa are anticipated to receive 10% and 7%, respectively. Companies in Africa are anticipating average increases of 8% and companies in the Middle East expecting to give employees increases of 5.4% in 2013.

General salary increase expectations in the GCC region range from 5 to 6%, UAE (5.0%), Bahrain (5.0%), Oman (5.1%), Qatar (5.2%) and Kuwait (5.4%), while Saudi Arabia is anticipated to enjoy the highest increase in pay of 6% in 2013. These figures have remained relatively unchanged over the last couple of years, a sign of the region relative economic stability and mature business environment.

Zaid Kamhawi, Middle East Business Leader for Information Product Solutions at Mercer, said, "Anticipated pay increases are affected by consumer price inflation, the anticipated pay increase in 2013 are predicted to be above the forecasted inflation generating real pay growth for employees."

Kamhawi said, "Companies however are placing less emphasis on inflation rates when budgeting for pay increases, and factoring such variables as relative pay competitiveness, affordability, labour market conditions and confidence in their business outlook."

"In 2012, like in other regions, we saw the introduction of salary freezes in a number of Middle East markets. Our forecast shows that an estimated 5% of companies will look to freeze salaries in 2013 across the region. The Middle East region showed the lowest and healthiest figures across the ME and Afirca region in terms of salary freezes," he added.

The picture is varied across EMEA, with rates of pay inflation for workers in other parts of Europe outpacing that of employees in Western European nations. Across Western Europe, on average, companies are predicting employee pay rises of 2.6% in 2013, marginally lower that the average of 2.7% awarded in 2012. By comparison to Western Europe, the rates of pay increases in Central and Eastern Europe are much higher at 4.6%. Multi-nationals may have smaller operations in many of these countries and currency considerations may mean that even though the increases appear high, they may not actually translate into a large cost for multinationals.

"The figures provided are figures which Compensation and Human Resource Managers - those responsible for planning salary increases - are forecasting in each country. These forecasts, of course, have to be approved by company management and depend on numerous economic factors, as well as an individual employee performance," said Zaid Kamhawi.