Generous pay hikes fly out the window

As the economic downturn crimps demand for new apartments, goods and services in the UAE and other GCC countries, the workers who either create or sell them are losing their jobs by the hundreds.

Layoffs have come to the oil-rich Gulf. In recent weeks, companies in the UAE alone, such as Nakheel, Damac, Omniyat and Al Shafar General Contracting, announced more than 1,000 job losses.

While those who are still on the payroll are lucky, prospects of a rise in pay next year now look bleak.

Many companies in the GCC are now rationalising workers' salaries as a cost-cutting solution. Recruitment plans have been revised, while salaries for newly hired and redundant staff are reportedly being slashed in lieu of layoffs.

Those mostly affected are workers in the investment, banking and real estate sectors.

Advantage Consulting, a management consulting firm, recently surveyed 500 organisations in the UAE, Bahrain, Kuwait, Oman, Qatar and Saudi Arabia, to assess the prevailing economic scenario in the GCC countries.

In its "Global Financial Crisis and GCC Salary Trends Report," Advantage Consulting revealed that workers in the region will continue to get salary increases, but companies would probably no longer be as generous as they had been in the past few years.

In the UAE and Qatar, where increases were the highest in 2008 (13.6 per cent and 12.7 per cent respectively), pay adjustments for 2009 are expected to drop to 10.9 per cent and 10.2 per cent respectively.

Employees in the UAE had been receiving pretty good pay increases, which steadily grew from 8.1 per cent in 2003 to 13.6 per cent in 2008.

In Bahrain, Kuwait, Oman and Saudi Arabia, the percentage of pay increase is also expected to fall to 8.4 per cent, 8.1 per cent, 9.7 per cent and 7.8 per cent respectively.

Across the GCC, salary increase in the banking and investment sector next year will probably be limited up to 9.2 per cent, lower than the 12.2 per cent increase in 2008.

Expected salary hike in the real estate sector is 10.3 per cent, while workers in the fast moving consumer goods (FMCG) and oil and gas sectors will see pay increases of up to 8.3 per cent and 8.9 per cent respectively.

The survey also confirmed that hiring of new staff in the GCC has already slowed, and will decline further, as companies in the manufacturing and service sectors are planning to trim down payrolls.

Vacancies in manufacturing and services were at their lowest, last month, in four years.

Workers in the healthcare sector will see the lowest increase, 6.1 per cent, next year.

However, given the economic condition, prospects of a salary increase may be bleak, but talented staff will always be in demand, or are entitled to, a premium.

As they say, people are the most important asset of a company and it is the strength of the staff that will carry an organisation through turbulent times.