Employees in region face pay freeze this year

Employees in the region are in for a rough time this year as many companies are still adopting a cautious stance and are either granting very minimal pay hikes or freezing salary adjustments for 2013.

A survey among 425 recruiters in the GCC region showed that 17 per cent of the companies don’t intend to adjust staff compensation, while 50 per cent of the employers intend to grant only single-digit increases this year.

“Employers across sectors want to approach this year with cautious sentiment which is why most of them predict single-digit hikes in 2013,” Tarun Aggarwal, business head at Naukrigulf.com, told Gulf News.

The employers’ general sentiment has not changed much since last year. According to Naukrigulf.com, 43 per cent of the employers in the region granted single-digit salary hikes in 2012.

“The results on salary growth is almost similar. There is not much change in sentiment among recruiters across the region when compared to last year,” Aggarwal added.

With the increases in everything from the cost of rent to transportation, groceries and other day-to-day living essentials, the lack or minimal pay adjustments is likely to affect the morale of employees in the GCC. Analysts point to compensation package as a big factor in job satisfaction and employee turnover.

“Base pay or salary is very important in the UAE to attract and retain employees,” noted Marjola Rintjema, senior consultant, talent and reward practice, at Towers Watson.

Main attraction

In Towers Watson’s Global Workforce Study 2012, the UAE results show that salary is the main attraction and retention driver. “Employees rate [salary] as the most important reason why they would consider joining or leaving an employer,” Rintjema told Gulf News.

Among those surveyed in the UAE, 54 per cent say salary is a reason to consider leaving their employer, compared to only 42 per cent globally. “So, if you want to retain your employees, you may want to keep close track of what your peers in the labour market are doing before you decide on a salary freeze,” Rintjema pointed out.

Andrew McNeilis, chief operating officer at Phaidon International, however, says that at least in the finance sector, the employment market in 2012 showed better prospects.

“Many organisations focused on growth as a key objective leading to increased investment in hiring. Despite this, financial professionals still maintained a negative perception of the market for 2013.”

Selby Jennings, a special financial recruitment firm, says that “the negative perception of the market held by finance professionals is not totally founded, as employment statistics for the coming year look promising.”

Expansion

Although faced with tight budget, more firms are looking to expand their workforce this year.

In a survey by Naukrigulf.com, 68 per cent of recruiters said that new jobs will be created in 2013, up from 64 per cent in July 2012.

Nearly half of the recruiters (48 per cent) predicted that new jobs await those with 4 to 8 years work experience. About 40 per cent said new positions will be offered to those with 1 to 3 years experience.

Companies that are more likely to hire and retain staff are from the construction and retail sectors. In the oil and gas sector, however, the hiring situation doesn’t look very optimistic, with only 68 per cent saying new jobs will be created, compared to 83 per cent six months ago.

The overall job situation doesn’t look quite rosy, either. About five per cent of the employers said there might be layoffs happening in their organisation. About 14 per cent of them also said they won’t hire new staff in the coming months.