Salary increase forecasts for 2016 in the UAE and Qatar are recorded at 4.9 per cent, a figure below 5 per cent for the first time in five years, a report said, adding hikes in Saudi Arabia are expected to hover around 5 per cent, much lower than the traditional 6 per cent seen in the last few years.

The newly released 2015 Total Remuneration Survey Results from Mercer, a global consulting leader in health, wealth and careers, also noted that caution is also being witnessed with companies’ hiring intentions, which have considerably declined over the past year.

In 2014, 71 per cent of organisations interviewed for the survey stated they planned to increase headcount in 2015, but when asked the same question earlier this year, only 57 per cent declared plans to increase personnel during 2015. In Saudi Arabia, the decline was from 79 per cent to 66 per cent.

Nuno Gomes, principal - Information Solutions Business Leader at Mercer Middle East, said: “There is no doubt that 2015 has seen one of the biggest shifts in economic momentum in the Middle East in recent years. The rapid decline in oil revenue, which has resulted from oil prices falling from over $100 to less than $50 a barrel, is having a significant impact on the growth plans for businesses in the region.”

“This 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. Added to this are underperforming financial markets and regional conflicts, with the overall picture one that is subduing companies’ confidence and curtailing investment,” added Gomes.

“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. Companies are looking to introduce new and interesting approaches to rewards, and benefit from the macro-economic environment to make necessary or desirable changes,” Gomes explained.

Mercer Middle East reports that many organisations are using the current economic climate to make changes that will simplify their compensation structures and policies, with the most common approach being the consolidating of guaranteed allowances.  The organisation says that this phenomenon reflects the increasing pull of the region as a career or life choice, with a concomitant higher value placed by expatriates on monthly pay, irrespective of its form.

“One clear trend observed in Mercer Middle East’s 2015 Total Remuneration Survey was an increase in the consolidation of allowances, which we recorded as being at 19 per cent, with predominantly housing and transportation being bundled,” Gomes said.

“The prevalence was 13 per cent last year and 9 per cent in 2012. This doubling of the practice in just three years is something we attribute to the modern generation of expatriates seeking similar remuneration structures to those found in their countries of origin.”

Pension arrangements and flexible working

The survey found that 10 per cent of companies in the UAE have a pension scheme in the form of a savings plan, a differentiating factor for organisations seeking positive attraction and retention outcomes.

In reference to flexible working, , the poll found that 51 per cent of organisations say they offer flexible working hours to their employees, a small increase from 49 per cent in 2014 and 46 per cent in 2013.

“Pension plans are likely to become more important for employees in the coming years and we anticipate that companies will start to adopt of formal schemes as opposed to the savings plans that we are currently seeing. When we look at flexible working, these are policies that always land well with employees in the UAE, as they cater for the diverse workforce found in the country,” said Gomes. – TradeArabia News Service