Pedestrians at Bank Street in Bur Dubai. Despite improving bottom lines on the back of a positive economic outlook, organisations continue to tread with caution. Image Credit: Gulf News Archives

Dubai: Several surveys have it that companies are increasing bonus and allowance handouts this year, but it seems that the majority of workers won’t be seeing any changes in their payslip anytime soon.

According to a human resources (HR) strategist, many companies in the UAE may have been aware that inflation is eating into their employees’ earnings, but they remain reluctant to grant adjustments on allowances.

Despite improving bottom lines on the back of a positive economic outlook, organisations continue to tread with caution because they want to make sure supplemental compensation doesn’t rise unsustainably.

Workers have been hoping for a relief from rising rents, which rose on average by 22 per cent last year, and increasing cost of commodities and services.

Mercer earlier released a survey this year that showed that among the 147 companies in the UAE, only less than half (41 per cent) in Dubai and 24 per cent in Abu Dhabi are considering increasing housing allowances in 2014. An increase in education allowances is also being considered by less than a quarter (24 per cent) of companies in Dubai and 19 per cent in Abu Dhabi.

Nuno Gomes, principal, information solutions leader Middle East, at HR adviser Mercer Consulting, said the findings indicate that employers are aware of the inflationary pressures in the UAE, fuelled by Expo 2020 and the global economic growth outlook, and that they intend to implement some changes in allowances and benefits to their staff.

“However, there’s still a majority of companies that do not plan to make any increases this year, waiting to see what happens in 2014,” Gomes told Gulf News.

“We see most organisations being very cautious this time around compared to the late 2000s, making sure that compensation doesn’t rise to unsustainable levels that can’t be cut after another crisis or slowdown.”

It is common practice among companies in the Gulf Cooperation Council (GCC) countries to provide housing, transportation, children’s education and home leave benefits or airfare allowances to their employees. According to Aon Hewitt, housing and transportation subsidies are provided on a monthly basis, while education and home leave benefits are provided based on actual costs.

Towers Watson’s research showed that 25 to 40 per cent of an employee’s total package is made up of allowances. Many companies grant housing aid in the form of a lump sum, while some provide the extra money as a percentage of the base salary or as part of a consolidated allowance package.

Robert Richter, compensation survey manager at Aon Hewitt Middle East, noted that the cost of living “has been high on the agenda” since Dubai succeeded in its bid to host the World Expo in 2020. He said they expect employers to start making some changes in their employees’ supplemental compensation “in the interest of talent retention”.

“The momentum sustained by the announcement as well as the rapid infrastructure development, has seen rental and purchase prices start to rise again to pre-crisis levels — all the while housing allowances have stayed the same.”

According to Aon Hewitt’s Allowances and Benefits Survey that covered more than 100 companies in the GCC, education assistance allowance has already gone up at some companies by almost 30 per cent, now ranging between $8,000 and $12,000 per child across job roles.

Education assistance coverage has also expanded, with nearly half of the companies across the UAE now extending the aid not only to managers, but to other employees.

Housing allowances in the UAE, which are traditionally driven by seniority, remain “relatively stable”, with rates ranging from $20,000 to $53,000.

However, another survey conducted by Towers Watson claims that more than 80 per cent of companies are actually planning to increase the housing allowance of their staff. Less than half (47 per cent) are considering a 5 to 10 per cent increase, while 16 per cent are eyeing a 10 per cent adjustment. Fewer employers (21 per cent) are planning to grant a 5 per cent increase.

Bonuses are also high on the agenda in some organisations in the UAE, but it looks like the majority are holding off substantial increments. In the latest survey by eFinancialCareers, 45 per cent of the finance professionals in the region said they were not happy with the amount of their annual bonuses, while only 9 per cent said their expectations had been exceeded.