The region’s instability and implementation of Value-Added Tax (VAT) are factors putting companies in a spiral of uncertainty; employees are the ones who will suffer.
According to a report published by Informa, the GCC will see salary freezes this year.
Over 10% of companies are not willing to give employees any raise of salary this year.
However, it gets worse.
The bad news
Informa’s report states that 3% of companies will likely reduce salaries, as VAT is making companies unsure of their revenues.
14% of companies said that VAT would be an influencing factor when considering salary increases, 30% are uncertain of what the impact of VAT will be, and 59% said that VAT would not be a deciding factor.
Gulf News reported that 15% to 20% of companies would implement a very minimal increase.
Around the world, workers are seeing a 2.5% salary increase, while the GCC, the increase averages around 2.3%.
Oman will see a 3.1% salary increase, Qatar a 2.9%, Bahrain a 2.7% Saudi Arabia a 2.6% and Kuwait 1.6%
The UAE is going to see a 5% salary increase to compensate for VAT.
There is some better news!
The good news
Reported by the HR Observer, a platform for HR professionals to exchange insights and expertise, many companies are planning on implementing compensation and benefits (C&B) strategies.
Improving employee engagement has become the top focus with 45% companies mentioned and improving employee retention being 41% in 2018.
The C&B strategies are being achieved by companies investing in training programs, pension options, and transportation offerings.