Middle East companies are likely to continue to spend more in pay rises to retain talent within their organisations into 2012, according to human resources consultants.
In a report released yesterday, Towers Watson research suggests that the salaries in the UAE will "rise by a further 5.7 per cent in 2012" following "an average of 5.5 per cent [rise] across all industries in...2011." The latter figure compares to "4.4 per cent the previous year," the firm said. The forecasts follow survey findings by human resource consultant Mercer that salaries in the UAE will rise by 5.5 per cent in 2012.
Mercer made the suggestion in mid-December after interviewing 300 firms across the Middle East.
Mercer said in a statement that of those surveyed, an "overwhelming majority predicts raising salaries in the coming year by between 5.5 per cent [UAE] and 6 per cent [Qatar and Saudi Arabia]".
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In figures released yesterday at the Towers Watson Middle East Forum, the company said that salaries across the Middle East were higher in 2011 than the year before.
The company said that "of the GCC [Gulf Cooperation Council] countries in 2011, the Kingdom of Saudi Arabia had the highest average salary increase of 6.2 per cent, followed by Qatar [5.8 per cent], Kuwait and the UAE [5.5 per cent], Oman [5.3 per cent], and Bahrain [5.0 per cent]. Egypt led the way in the Mena [Middle East and North Africa] region with a 10 per cent growth, while Bahrain saw the smallest increase at 5 per cent."
Towers Watson said fewer companies in the region froze salaries this year as compared to 2009 and 2010.
"The data provides some interesting insights into rewards and compensation trends, particularly how salaries have continued to increase despite the economic and political turmoil that has affected many countries in the Mena region," said Billy Turriff, business leader for Data, Surveys and Technology at Towers Watson Middle East. "With overall remuneration levels increasing in 2011, more organisations are using bonuses and allowances to differentiate their reward offerings against the competition. Next year we expect pay increases to be approximately 0.5 percentage points higher than 2011."
Businesses are seen awarding higher pay rises as competition for talent increases in the GCC. "Broadly, economic activity across the Mena region has been solid in most areas but confidence and optimism has been buffeted by pockets of social unrest in what has been a period possibly unique in the Middle East and the modern era," said Zaid Kamhawi, head of Mercer survey practice in the Middle East.
"Combine that with uncertainty about events in Europe and the US economy and it is unlikely that 2012 will bring about any change in the short term, although as always there will be pockets of prosperity like here in the GCC."