Saudi firms hike salaries to tackle soaring inflation

Riyadh: In a fresh move to face the continuing rise of prices of consumer products, a number of Saudi private sector institutions decided to hike the salaries of their staff.

The increase, the first of its kind to be taken by such a large number of companies and banks, is being described as a 'high cost of living temporary allowance'.

Gulf News learnt that the salary increase would be 15 to 40 per cent of the basic salary of the employee.

Saudi Arabia is facing high inflation rates that reached five per cent in August.

Some Saudis are saying that the government's policy of pegging the Saudi riyal to the US dollar, which is at historically weak levels, is behind the current rise of the prices of consumer commodities.

But the government has denied this, citing high oil prices and global demand on basic commodities as the reasons for the high prices of products. The government also insists that it has no plans to de-peg its currency from the dollar.

Movers

Hamid Al Khraiaji, Etihad Etisalat (Mobily) CEO for human resources, said that his company was the first to take a decision of hiking its staff salaries to face the increasing prices of consumer products. He added that the salaries were increased by 20 to 40 per cent of the monthly salary of the company's 2,800 employees.

For its part, the Saudi Investment Bank decided to pay its staff 15 per cent on a monthly basis as high cost of living allowance, the bank said.

The bank's decision will come into effect from January 1, 2008 and will continue for one year. The bank added that the allowance would be reviewed according to prevailing conditions.

The move has encouraged large number of Saudi private sector companies to review their employees' pay structure.

Observers said that the salary increase would positively contribute in covering the cost of living requirements of many employees who are directly affected by the rise of prices of daily consumer products.

There are reports that the Saudi government will hike the salaries of its civil staff. The reports were not yet confirmed by the government, but it received momentum after the UAE decided last month to increase salaries all federal government employees by 70 per cent with effect from January 2008. Kuwait has also announced that it is discussing a new bill allowing the increase of civil government employees' salaries.