UAE salaries to rise by 6 percent in 2011 - study

·         Qatar tops regional pay rises

·         HR professionals get the highest raise

·         Moderate jobs growth forecast for 2011

·         Egypt turmoil could impact talent availability in the Gulf

Dubai, UAE, February 7, 2011 –- Private sector salaries in the UAE are forecast to increase at an average rate of 6.3 percent this year, according to research released today by GulfTalent.com, the leading online recruitment firm in the Middle East.

The findings were published in GulfTalent.com’s sixth annual review of labour market trends entitled “Employment and Salary Trends in the Gulf 2010-2011” and were based on a survey of 32,000 professionals and 1,400 companies across the six Gulf states.

Among countries, Qatar and Saudi Arabia had the highest pay rises in 2010 at 6.8% and 6.7% respectively. Oman was in third place with 6.4%, followed by Kuwait at 5.7%.

The UAE and Bahrain saw the smallest increases at 5.2% and 4.9% respectively.

Although much lower than the double-digit increases of 2008, the pay rises were all higher than the rates of inflation, resulting in improving living standards for many. However, an estimated 55% of professionals did not receive any pay increase at all.

Across the region, with consumer spending picking up, the retail sector saw the highest pay rise at 6.4%, while education had the smallest increase at 3.8%.

Among job categories, Human Resource professionals saw the highest raise at 7.1%. Many executives told GulfTalent.com that, with their companies increasingly focused on performance, the HR function had assumed a much greater significance. Lawyers had the smallest increases at 4.3%.

According to the study, pay increases were largely driven by the employers’ efforts to retain their top performers, growing demand for skill in Qatar and Saudi Arabia, as well as continued growth in Asia, the main source of talent for the Gulf.

With increasingly attractive career opportunities in their home countries, Asian professionals working in the Gulf received pay rises of 6.1% compared with just 3.2% for Western professionals.

Salaries in the booming Indian economy grew at 11.1% in 2010, compared with just 2.4% in the UK, where unemployment remains high following the financial crisis.

Based on the report findings, the Gulf’s labour market is witnessing “a small but fast-rising Chinese presence” – as employers seek substitutes for India and the Philippines, their traditional sources of skill, while a growing number of Chinese companies win major construction and energy contracts in the region, often bringing the required staff directly from China. Construction of a high-speed railway connecting Mecca and Medina, and a new port in Doha are among contracts recently awarded to Chinese firms.

Based on GulfTalent.com’s study, the employment market in the Gulf is expected to continue growing at a moderate pace, aided by global economic recovery, rising oil prices and continued government spending on infrastructure projects. 61% of companies surveyed expected to increase headcount in 2011, compared to 9% who planned staff cuts.

Mobility and the rise of Qatar

GulfTalent.com’s study highlights the rising prominence of Qatar as a destination for professionals. The trend has been driven by fast-rising salaries, falling cost of living, growing employment opportunities and an improving international brand, which came to a grand finale with the country’s surprise qualification to host the 2022 Football World Cup.

Based on an analysis of vacancies advertised by employers and recruitment agencies on GulfTalent.com website, job opportunities in Qatar have grown from 8% of all GCC vacancies in 2008 to 16% in 2010.

GulfTalent.com’s survey of mobility intentions found that, while the UAE remains the most attractive destination for professionals, favoured by 49% of GCC-based expatriates, Qatar is closing in fast, with a 44% following. Based on current trends, Qatar could become the Gulf’s most popular destination for expatriates.

Meanwhile, employers across the region continued to tap into the talent pool in Dubai, the study said. In addition to professionals who had relocated from Dubai since the onset of the crisis, an estimated 5% of Dubai’s residents now commute daily to their jobs in Abu Dhabi, a five-fold increase since 2008.

A similar trend was found in Bahrain, where 2% of residents cross the border each day to Saudi Arabia’s Eastern Province, the home to the country’s oil and petrochemical industries, up from 1% in 2008.

Despite outflows resulting from job cuts, the UAE remained far ahead of all other Gulf countries in terms of popularity with its current residents, thanks to its superior infrastructure. 72% of UAE residents prefer to remain there, compared to 59% in Kuwait and 50% in Qatar.

Impact of Middle East turmoil

According to the study, potential turmoil in the wider Middle East region, most recently in Tunisia and Egypt, could have a mixed impact on the availability of talent in the Gulf during 2011.

Any sustained upheavals “could increase the supply of Arab professionals from regional hotspots who will seek careers in the Gulf, putting downward pressure on salaries”, the study said, citing the experience of the 2006 conflict in Lebanon which resulted in a mass migration of Lebanese professionals to the Gulf.

The report adds that “the resulting coverage of the region in international media may deter some Western professionals from relocating to the Gulf”, similar to the trend seen in 2003 in the immediate aftermath of the Iraq war.

Events in North Africa have also drawn attention to spiralling food prices and the challenges of youth unemployment. According to the study, employers in the Gulf are likely to face tougher workforce nationalisation targets in 2011, as governments accelerate existing efforts to create jobs for their nationals, particularly in Bahrain and Oman which according to UNDP statistics, have the highest rates of unemployment in the GCC.

GulfTalent.com’s study was based on a survey of 32,000 professionals and 1,400 companies in the six countries of the Gulf Cooperation Council (GCC), as well as interviews with regional business leaders and human resource managers. The survey was conducted during December 2010 and January 2011. The full publication entitled “Employment and Salary Trends in the Gulf 2010-2011” is available for download free of charge from the company’s website at: www.gulftalent.com.

GulfTalent.com is the Middle East’s leading online recruitment portal, used by over 2 million professionals and 4,000 companies across 9 countries.

Table A: GCC Average Pay Rises by Country 2010-2011

          Country                   2010             2011 Forecast

          --------                    -------           ----------------

          Qatar                     6.8%            7.2%           

          Saudi Arabia            6.7%            7.0%           

          Oman                     6.4%            7.0%           

          Kuwait                    5.7%            5.9%           

          UAE                        5.2%            6.3%           

          Bahrain                   4.9%            5.1%           

          Overall GCC             6.1%            6.6%

Source: GulfTalent.com

Table B: GCC Inflation 2010-2011

          Country                   2010             2011 Forecast

          --------                    -------           ----------------

Saudi Arabia            5.4%            6.3%

Oman                     4.0%            4.5%

Kuwait                    3.9%            4.8%

Bahrain                   2.5%            3.0%

UAE                        1.6%            2.1%

Qatar                     -1.9%           2.1%

Source: Economist Intelligence Unit

Appendix -- Charts

2010 salary increases were similar to 2009, but well below their 2008 peak. Pay rises are forecast to edge slightly higher in 2011.

Qatar topped the salary increases in 2010, while Bahrain had the lowest average increase.

GCC salary increases were far higher than Western countries, but much lower than those in Asia, particularly India.

Over 5% of Dubai residents now commute daily to their jobs in Abu Dhabi, a five-fold increase over 2008 level of just 1%.

 

Over 2% of Bahrain residents cross the border daily to work in Saudi Arabia’s Eastern Province, double the figure in 2008.

UAE remains the Gulf’s most popular destination for expatriates. However, its popularity has taken a dip since 2008, while Qatar has risen sharply, coming close to overtaking the UAE.