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2.3pc wage hike seen for GCC workers in 2016

LOS ANGELES, December 8, 2015

Workers in the GCC countries can expect a real wage increase of 2.3 per cent in 2016, the lowest of these being the UAE where salaries are expected to increase by 0.9 per cent, taking inflation into account, a report said.

The forecast appears positive for workers in the Middle East however plunging oil prices and economic and political uncertainty throughout the region is continuing to make an impact, according to a forecast titled “Korn Ferry Hay Group 2016 Salary Forecast” issued today (December 8) by Korn Ferry, a top global people and organizational advisory firm.

“As 2015 draws to a close we can look back on a year of continued growth in GCC.  However we have seen a gradual slow down, due primarily to lower oil prices which have impacted the economies in our region,” said Vijay Gandhi, regional director for Productized Services at Hay Group.

 “There is a definite feeling of slow down in the market with around 15 to 20 per cent of companies now suggesting that they will introduce a pay freeze for 2016. We are already seeing some corrections in some key sectors including Real Estate, Luxury Retail, Financial Services and Oil and Gas Services,” he added.

“There is no doubt that there is a cloud of cautiousness in the UAE as businesses focus on restricting increases in fixed costs (including through the payroll), improving their profitability and top line revenue and restructuring to gain higher efficiency from their current staff. In addition to lower pay increases, we’re expecting this to result in lower bonus pay outs than recent years,” Gandhi explained.

The impact of inflation

Organisations in the Middle East and Africa have forecast salaries to rise by 5.3 per cent and 6.5 per cent respectively. Relatively low inflation means that workers are set to see real wage increases of 3.8 per cent and 1.6 per cent.

In the Middle East, Jordan (5.3 per cent) is amongst the highest of real wage increases, with the UAE set to see the slowest real wage growth (0.9 per cent) – down from 2.8 per cent last year. High inflation in Egypt means it is the only country in the region set to see a cut in real wages (-0.4 per cent).

The war for executive talent

Executive talent is still in high demand across the GCC region with a shortage of key talent at the C-Suite level. Gandhi said that businesses looking to retain their top employees are emphasizing long term incentive plans and creating enterprise value schemes that reward leaders over the longer term.

“Long term incentives drive alignment with corporate goals and reward high performance. Our data shows that the fixed pay of executives is broadly competitive with the UK, Europe and Australia; however the total variable pay received significantly lags behind these markets. Going forward, we will see a bigger proportion of total executive remuneration at risk than we see today,” Gandhi explained.

Globally, workers are expected see real wage increases of 2.5 per cent – the highest in three years – as pay increases combine with historically low inflation to leave employees better off, said the forecast.

According to the Korn Ferry Hay Group forecast, salaries in Asia are forecast to increase by 6.4 per cent – down 0.4 per cent from last year. However, real wages are expected to rise by 4.2 per cent – the highest globally, despite China’s economic slowdown. In fact, the increasing need for skilled workers and the sustained rise of the burgeoning middle class has resulted in a positive outlook for the Asian region.

Seeing the benefit of being a part of the fastest growing major economy, Indian workers are also forecast to see the highest real wage increase they have seen in the last three years, at 4.7 per cent compared to 2.1 per cent last year and 0.2 per cent in 2014. – TradeArabia News Service




Tags: GCC | Salary increase | Korn Ferry Hay Group | Wage outlook |

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