Dubai is among the 10 cities in the world with the highest salaries, a Deutsche Bank study said Image Credit: Gulf News


Rising living costs should, in theory, be offset by cost of living allowances (Cola). But what if your Cola has remained stagnant for years?

The regular review of salaries and living allowances is needed and adjustments be made by companies to retain key talent, says a UAE-based expert.

Internationally speaking, US-based employee relocation company TRC Global Mobility recommends an annual review of the Cost of Living Index and current exchange rates annually, to make any necessary adjustments on employees’ compensation.

For Alan Bacason, head of Compensation and Benefits at a UAE government entity, a review every two years for expatriates may suffice.

“If we will go by global best practices, employee compensation and benefits should be reviewed and adjusted every two years on average by employers,” Bacason, who has worked in the HR industry in the Middle East for 26 years, told Gulf News.

Since there is no set minimum wage in the UAE, there is also no provision on how to calculate Cola, he said.

“If you go by the Labour Law, it’s purely based on practices that stipulate 60 per cent for basic pay and 40 per cent for allowances. This eventually evolved when employers fixed the basic salary and just added variables in the form of rewards,” he explained.

“What will compel companies to make changes is the competition in the market. If more people are leaving the company and moving to its competitors, this indicates that companies losing talent have to review [their policies],” he said.

Bacason said the age-old belief that employers should take care of their employees who will take care of their business is still applicable in today’s world.

The best employers in the UAE so far in terms of compensation and benefits, he said, are in the oil and gas sector, followed by the banking and public sector. The hospitality industry comes next.

“Some companies have a scheme of automatic annual increment, even as low as Dh100 ...” and yet this is preferable, said Bacason, compared to not receiving any increment at all.