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UAE and Qatar employees to get lowest salary hike in 5 years

“2016 is likely to be…a year of restrictions, caution and a focus on improved efficiency”

Employees in major Arab economies will get lower-than-expected salary increases, according to the latest figures.

Human resource consultancy Mercer Middle East’s 2015 Total Remuneration Survey Results, released on January 6, suggests that companies in the UAE and Qatar will offer a pay hike of 4.9 per cent in 2016, a figure that fell below five per cent for the first time in five years.

The consultancy cites the drop in oil prices, the struggling financial market and regional political volatility as the key reasons behind the reduced pay hikes.

Meanwhile, firms in Saudi Arabia, the country worst hit by the sharp decline in oil prices, project an increment of nearly five per cent, which is “much lower than the traditional six per cent seen in the past few years,” says the survey.

Pointing out that 2015 saw the biggest shifts in economic momentum in the Middle East in recent years due to the rapid decline in oil prices, Nuno Gomes, Principal – Information Solutions Business Leader at Mercer, argues that the “fall in petro-dollar income has led to cuts in government spending observed in the last three to six months, which is compounding the situation.”

Oil prices tumbled more than 60 per cent from $100 per barrel last year due to weak demand and oversupply.

Talent solutions firm Aon Hewitt, in a survey released in September last year, predicted a 5.1 per cent salary growth in Saudi in the next year. It had forecasted a five per cent hike for the workforce in the UAE and Qatar. However, oil prices dropped further and the economies announced their grim budgets in the following months.

Mercer Middle East’s Total Remuneration Surveys (TRS) cover all forms of cash and non-cash compensation elements for more than 1,000 benchmark jobs. Across the Middle East and North Africa region, more than 1,600 unique organisations representing almost 250,000 employees were surveyed in 2015.

The Mercer study also forecasts that the region will see a decline in hiring in the current year as companies are expected to show fiscal prudence. Only 57 per cent of the organisations surveyed in the UAE and Qatar are planning to increase headcount, as opposed to 71 per cent in a similar survey a year ago. In Saudi Arabia, the decline was from 79 per cent to 66 per cent.

“It is clear that 2016 is likely to be characterised as being a year of restrictions, caution and a focus on improved efficiency from an HR, compensation and benefits perspective,” remarks Gomes.