Pay gap widens between Qatar and GCC

The study analyses actual policies of organisations and also highlights the dynamics of salary movements in the local market. Hay Group consultant Harish Bhatia, leading the study, said, "Qatar's economic indicators are conducive to a stable environment. The growth rate has slowed from 14% last year to 6.5% this year, but still remains one of the highest in the region. Inflation is also stable at 1.4%."

He continued, "In regards to how this impacts the labour market, ambitious plans for infrastructure development buoyed by the increasing presence of non-oil sectors such as real estate, hospitality and manufacturing are fuelling Qatar's sustained demand for skilled talent. Multinational organisations are setting the pace and local organisations are growing, keeping pressure on pay, both for nationals and non-nationals."

For the past three years Hay Group's research has shown that salaries in Qatar have consistently been amongst the highest in the GCC. The salary premium, which last year was 16%, was largely provided to compensate for the high cost of living. However, with the recent mandated rise in pay levels for Qatari nationals, the gap between Qatar and other GCC states has increased further to over 25%.

Bhatia, says the picture is not the same for all, and that the large pay premium has impacted only Qatari nationals who comprise just 16% of the overall sample. There are also marked differences between the sectors of banking, oil and gas and other industries.

"Between 2008 and 2012 the pay premium for nationals rose from 28% in 2008 to 154% this year. This increase in the pay gap has historically been driven by the banking and oil and gas industries where most nationals are employed but with a 60% pay rise in the public sector last year the premium has grown substantially."

Hay Group reports that whilst the oil and gas industry and banking sectors continue to be the preferred employers of seasoned and experienced nationals, nationalisation remains a challenge for other private sector organisations in the retail, FMCG, hospitality and engineering sectors looking to hire experienced nationals. This problem is accentuated by the fact that the oil and gas industry is paying 80 per cent above the market average.

Bhatia says that this also poses challenges for the overall nationalisation agenda: "Nationalisation is, and will continue to be, hindered by a shortage of skilled Qatari nationals with the technical experience that the economy needs. The best and brightest are still going in to the oil and gas industry."

He continued, "Within our study, 68% of organisations indicated a shortage of skilled talent as the reason they cannot hit their nationalisation targets and this trend looks to continue. Over 75% of the private sector indicated an inability to match pay expectations as their prime reason for not being able to attract nationals."

The Qatari government understands the issues facing the private sector and is taking a longer term view of developing their workforce says Bhatia, "Qatar is investing heavily in education to ensure bottom up investment in Qatar's future rather than pushing changes down from the top. This investment will pay dividends in the longer term but private sector employers today face recruitment and retention challenges in the short term because of the population demographics in relation to rapid economic growth."

Bhatia says that there are signs of change that Hay Group has noted in this year's report: "Even with this ongoing global gloom, it is a positive indicator of growth to see that 17% of the current workforce has been hired within the last two years, indicating an increasing willingness to expand the workforce in Qatar."