The decision to increase salaries of Qatari citizens by 60 per cent for civil employees and 120 per cent for military personnel is the latest episode in a series of pay increases in Gulf Cooperation Council (GCC) countries. It is a positive move which has led to improved living standards and minimised the effects of inflation.

Wage and salary policies are one of the most important economic instruments a government has at its disposal, and have a direct and significant impact on living conditions.

As a result, wage and salary policies should be given great consideration.

Until now, wages in GCC countries have increased consecutively in short spans of time, supported by huge oil revenues and high growth rates achieved over the past 10 years.

A large number of people, specifically Gulf citizens, have benefited from salary increases, and so more positive impacts of salary increase on economic conditions in GCC countries can be achieved if the salary increase policy can be associated with new approaches to development.

These approaches should seek to increase the efficiency of the GCC job market, including qualification of Gulf citizens to work in the professional and vocational sectors.

Such a move will not only have significant positive effects on living standards, but will also reflect positively on economic growth and diversification of sources of income.

Another important consideration is that while the current salary increases are welcome, they could serve to block the approach adopted by GCC countries in implementation of their long-term strategies to encourage citizens to work in the private sector.

Salary increases will block the efforts of GCC countries that seek to encourage citizens to join the private sector as it has undoubtedly led to widening the wage gap between the public and private sector.

According to Al Sharq, a Qatari newspaper, Qatari citizens working in the private sector are now dreaming of salary increases equivalent to their counterparts in the government sector, despite the fact that there are no rules that oblige the private sector to give similar increases to its employees.

This is a problem that needs to be addressed, creating harmony between wage policies and development approaches of GCC countries in a manner that enables policies to serve the GCC's strategic aspirations — aspirations which represent great development importance on the long run.

We do not claim that these solutions are easy and available, yet this problem can be tackled, especially given that the private sector has become the master party, with keys to many vital economic sectors, including the financial and banking, trade and service sectors.

Also, the number of joint stock companies is on the increase year after year, which is a positive development and reflects the flexibility that distinguishes GCC economies.

Among the suggested solutions that can be considered is the issue of provisional incentives given by the country to citizens working in the private sector, especially at the beginning of joining work in this sector.

Another suggestion is exempting citizens who work in the private sector from some kinds of fees and taxes, so as to narrow gaps that resulted from wage increases in the public sector.

This will help restore the balance at its lowest level in the Gulf job market, especially given that one million of Gulf graduates from university and high education institutes are expected to enter the job market over the next five years.

Job market

The GCC job market is expected to see a large increase in job applications from Gulf citizens who cannot be accommodated in state bodies, according to studies released by GCC Labour ministries and some international organisations. The Gulf countries, however, count on the private sector to help create job opportunities for citizens.

It seems that the Gulf private sector is able to offer a lot of job opportunities, yet reforming the job market is a must to make this approach a success, especially with regard to restoring the balance of wage policies in coming years.

 

Dr. Mohammad Al Asoomi is a UAE economic expert.