15 to 20% of GCC firms to freeze pay hike, benefits
Real earnings in UAE to grow at the slowest pace in GCC region, according to a new report
Dubai: Employees in the UAE will receive modest or no increases in their salaries and bonus payouts next year as companies are getting cautious about spending more money on staff wages amid the economic slowdown.
According to a report released on Tuesday, around 15 to 20 per cent of companies in the Gulf Cooperation Council (GCC) region are likely to impose a freeze on wage adjustments, while workers in the UAE are set to receive the lowest increase in real earnings.
A forecast issued by Korn Ferry, an organizational advisory firm, however, showed that workers around the world will see real incomes growing faster at 2.5 per cent, the highest in three years.
Growth in real earnings in GCC countries will average 2.3 per cent. The highest will be in Oman, at 3.1 per cent, followed by Qatar (2.9 per cent), Bahrain (2.7 per cent), Saudi Arabia (2.6 per cent) and Kuwait (1.6 per cent).
Professionals in the UAE are set to see a 5 per cent increase in their salaries next year, but if inflation is taken into account, the real growth in incomes will only be 0.9 per cent, the lowest in the region and down from 2.8 per cent in 2014.
Real wage figures factor in living costs or inflation, hence they may appear lower than the actual or nominal wage. They show whether or not people’s actual earnings are keeping pace with the rise in the cost of housing, goods, services and other living essentials.
Vijay Gandhi, regional director for productized services at Hay Group, said UAE companies are seeking to minimize their fixed costs, including payroll-related expenses, hence the salary outlook in the country is more sombre compared to other labour markets.
“There is no doubt that there is a cloud of cautiousness in the UAE,” Gandhi said.
“Organisations in the UAE are being particularly cautious in their forecasts for next year. Despite being the most diversified economy in the Gulf region, the oil price has a significant influence on overall sentiment,” he told Gulf News.
“With the plunge in oil prices we’ve seen over the last twelve months, and worsening even further this week, UAE businesses are very focused on minimizing their fixed costs and one of the biggest fixed costs for any business is wages.”
He said employers in oil and gas services, real estate and financial services, in particular, are looking for ways to cut back on their outgoings “to drive efficiencies.”
In contrast, the prospects are brighter for other markets outside the region. In Europe, workers are set to see an average salary increase of 2.8 per cent, and with inflation at 0.5 per cent, real earnings will rise by 2.3 per cent.
Workers in Asia will enjoy bigger pay increases averaging at 6.4 per cent, though the rate is slightly down by 0.4 per cent from last year. Real wages are forecast to rise by 4.2 per cent, the highest globally.
In the United States, real income growth will be around 2.7 per cent, while people in Canada can expect salaries to rise in real terms by 1.3 per cent.
The salary forecast is based on data gathered from 73 countries, excluding Ukraine and Venezuela, where political turmoil and high inflation have led to real wage decreases of 36.8 per cent and 52.6 per cent, respectively.
Summary of Salary Forecasts: Global Averages
Region
Country
2016 Salary Forecast
2016 inflation forecast[i]
Salary Increase vs inflation (‘Real’ increase)
2015 Salary Forecast
Africa
Algeria
6.0%
5.1%
0.9%
6.6%
Latin America
Argentina
31.0%
27.4%
3.6%
32.5%
Pacific
Australia
2.5%
1.9%
0.6%
3.0%
Europe
Austria
3.0%
1.0%
2.0%
2.7%
Middle East
Bahrain
4.5%
1.8%
2.7%
5.0%
Europe
Belgium
1.7%
0.5%
1.2%
2.0%
Africa
Botswana
6.0%
3.2%
2.8%
n/a
Latin America
Brazil
7.7%
8.9%
-1.2%
6.1%
Europe
Bulgaria
4.0%
0.1%
3.9%
4.2%
North America
Canada
2.6%
1.3%
1.3%
2.6%
Latin America
Chile
5.0%
4.4%
0.6%
5.0%
Asia
China
8.0%
1.7%
6.3%
8.0%
Latin America
Colombia
4.7%
4.4%
0.3%
3.5%
Latin America
Costa Rica
5.5%
1.4%
4.1%
6.0%
Europe
Cyprus
1.8%
-0.5%
2.3%
0.0%
Europe
Czech Republic
2.0%
0.5%
1.5%
2.0%
Europe
Denmark
2.2%
0.6%
1.6%
2.5%
Latin America
Dominican Republic
6.2%
0.8%
5.4%
6.0%
Latin America
Ecuador
5.3%
4.2%
1.1%
n/a
Africa
Egypt
10.0%
10.4%
-0.4%
10.0%
Latin America
El Salvador
3.9%
0.2%
3.7%
4.1%
Europe
Estonia
3.0%
0.1%
2.9%
2.8%
Europe
Finland
1.0%
0.0%
1.0%
1.0%
Europe
France
1.9%
0.2%
1.7%
2.0%
Europe
Germany
2.9%
0.2%
2.7%
2.8%
Europe
Greece
2.0%
-1.4%
3.4%
1.3%
Latin America
Guatemala
5.1%
2.3%
2.8%
5.4%
Latin America
Honduras
6.4%
4.2%
2.2%
5.5%
Asia
Hong Kong
4.5%
3.1%
1.4%
4.0%
Europe
Hungary
3.0%
0.6%
2.4%
3.0%
Asia
India
10.3%
5.6%
4.7%
10.5%
Asia
Indonesia
9.1%
6.7%
2.4%
10.0%
Europe
Ireland
2.0%
-0.2%
2.2%
1.4%
Europe
Italy
2.5%
0.4%
2.1%
2.7%
Asia
Japan
2.0%
1.0%
1.0%
2.0%
Middle East
Jordan
5.0%
-0.3%
5.3%
6.0%
Europe
Kazakhstan
7.4%
5.8%
1.6%
7.8%
Asia
Korea
5.0%
0.7%
4.3%
5.0%
Middle East
Kuwait
5.0%
3.4%
1.6%
5.0%
Europe
Latvia
3.7%
0.7%
3.0%
2.4%
Middle East
Lebanon
9.3%
-2.2%
11.5%
6.7%
Europe
Lithuania
4.0%
-1.0%
5.0%
3.3%
Europe
Luxembourg
2.9%
0.1%
2.8%
3.2%
Asia
Malaysia
6.0%
2.1%
3.9%
6.4%
Latin America
Mexico
4.6%
2.7%
1.9%
4.8%
Africa
Morocco
3.6%
1.5%
2.1%
4.5%
Europe
Netherlands
2.5%
0.3%
2.2%
2.3%
Pacific
New Zealand
3.0%
0.7%
2.3%
3.0%
Latin America
Nicaragua
6.0%
4.4%
1.6%
6.1%
Europe
Norway
2.6%
1.7%
0.9%
3.2%
Middle East
Oman
4.0%
0.9%
3.1%
5.5%
Latin America
Panama
4.9%
0.7%
4.2%
5.4%
Latin America
Peru
5.0%
3.6%
1.4%
5.5%
Asia
Philippines
7.0%
1.8%
5.2%
7.5%
Europe
Poland
2.6%
-0.8%
3.4%
3.0%
Europe
Portugal
1.3%
0.9%
0.4%
1.0%
Middle East
Qatar
5.0%
2.1%
2.9%
5.0%
Europe
Romania
4.8%
-0.6%
5.4%
4.6%
Europe
Russian Federation
7.0%
14.5%
-7.5%
6.8%
Middle East
Saudi Arabia
5.0%
2.4%
2.6%
5.0%
Asia
Singapore
4.0%
0.3%
3.7%
4.4%
Europe
Slovakia
2.5%
-0.3%
2.8%
2.0%
Africa
South Africa
6.9%
4.8%
2.1%
6.2%
Europe
Spain
1.8%
-0.4%
2.2%
1.1%
Europe
Sweden
2.4%
0.1%
2.3%
2.3%
Europe
Switzerland
1.4%
-1.1%
2.5%
1.4%
Asia
Thailand
6.0%
-0.1%
6.1%
6.0%
Africa
Tunisia
6.8%
4.9%
1.9%
7.0%
Europe
Turkey
8.0%
7.4%
0.6%
9.0%
Europe
Ukraine
11.5%
48.3%
-36.8%
6.8%
Middle East
United Arab Emirates
5.0%
4.1%
0.9%
5.0%
Europe
United Kingdom
2.5%
0.2%
2.3%
2.5%
North America
United States of America
3.0%
0.3%
2.7%
3.0%
Latin America
Venezuela
70.0%
122.6%
-52.6%
40.3%
Asia
Vietnam
8.6%
1.3%
7.3%
11.4%
Source: Korn Ferry
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