Average salary increases in Bahrain are set to hit 5.3 per cent this year, according to a report by global consulting firm Hay Group.

And at a seminar in the Gulf Hotel yesterday (August 23) for human resource (HR) specialists, the consultants predicted that there would be continued steady growth in salary levels next year of around 6.5 per cent.

The report analyses pay data for 14,600 employees in Bahrain.

The average pay rise of 5.3 per cent is higher than the forecast of 5 per cent reflecting the steady economic growth of the kingdom.

Those at the management level and those with specialist skills have reaped the biggest rewards and functions including engineers, health and safety professionals and staff in environmental positions command a higher price in the market.

The report also finds there has been an increase in bonus payouts to those in management positions as organisations take steps to change the reward mix to include more incentive based pay, and a smaller proportion of fixed pay.

Currently standing at 7 per cent in Bahrain, this element of the pay package is expected to become of increasing importance, said Hay Group Middle East director of reward information services Vijay Gandhi.

'Variable pay, which takes into account individual and business performance, can be used to motivate people and reward the right behaviour effectively. Organisations can also use variable pay to drive efficiency by differentiating for performance,” said Gandhi.

'We anticipate more and more organisations in the region taking this approach. Companies in Bahrain have also increased their training budgets as employee development moves further up the agenda,' he added.

'Organisations need to engage with employees to get the most out of their people,' said regional director of leadership and talent Gerard Fitzsimmons.

'Companies are starting to look towards a total reward proposition which includes career development and other non- monetary benefits. They are now recognising the advantage of taking a broader view of reward. People respond to more than money, companies can no longer rely on incremental pay rises to retain their best people,' he added.

For 2011, the Hay Group reports average increases of 6.5 per cent, ahead of inflation which is forecast at 3.5 per cent for the coming year.

'Salary growth in Bahrain compared to the rest of the region has been very much in line with inflation over the last decade,' Gandhi added.

'It continues its drive to develop nationals in the work force and has been one of the most successful countries in the region to achieve targets,' he said. – TradeArabia News Service