Dubai: The bonus season is here and the vast majority of UAE residents, about seven out of ten, are expected to get a lump sum in 2015.

Most of the employees will likely get a bonus equivalent to their one month's salary, while a few lucky ones will get three times or more their monthly paycheque.

The problem, however, is that as they are struggling to meet their debt obligations, nearly half of consumers in the UAE won’t be able to enjoy their cash reward this year.

These are the findings of a new research commissioned by Zurich International Life. The study, conducted by YouGov, found that 71 per cent of residents in the country will get a bonus  in 2015.

When asked what they intend to do with their bonus, a significant number of the residents, or 39 per cent of the 1,000 respondents surveyed, said they will use the money to pay off their borrowings.

“Those lucky enough to receive a company bonus may get excited at the prospect of a bumper pay packet during the bonus season in March and April, but the reality is that the majority of people in the UAE are using this extra cash to settle debt or pay bills,” Zurich said.

The survey also found that the amount of bonuses being distributed to UAE employees has been rising.

The majority of company bonuses that have been released so far, (about 81 per cent) are equivalent to one month's salary, while a lucky seven per cent reported having received a bonus worth three times or more their monthly paycheque.

Despite the increasing amount of bonus compensation, the fact that many employees will be using the extra cash to repay debts is a cause for concern.

James Thomas, managing partner at Acuma, said  the study only shows that many people in the UAE are living beyond their means and need to review their finances to get them under control.

"This is a bad thing - a bonus should be a reward for your hard work over the year, and be used for something nice, or at least something of your choice, as opposed to being used to repay debt," Thomas told Gulf News.

"This suggests to me that general living expenses are in excess of the regular salary, and therefore getting into dangerous territory if for some reason the bonus is not paid."

Consumerism is high in the UAE, with many households spending more than they earn.

As of 2014,  around 77 per cent of residents in the country owed the UAE banks some money, according to a survey conducted by, a UAE-based finance comparison website.

“The tendency to live a lavish lifestyle in the UAE means many residents need their bonus to pay off financial liabilities. This leads to a greater strain on their long-term savings,” said Paul Dawson, head of retail distribution at Zurich International Life.

“Many expats look forward to tax-free bonuses when they move to the UAE with the intention to save and secure their financial future. They probably don’t expect needing to use their bonus to clear debt accumulated during their stay.”

About 16 per cent of the residents are likely to use their bonus to pay bills, while only a small number intend to use it to boost their savings in the bank (13 per cent), invest in property (11 per cent) or invest in a savings scheme (10 per cent). A smaller number, seven per cent, said they will use the extra cash to make purchases.

Preeti Bhambri, managing director of, said using bonus to settle debts is a wise move, although the findings of the study support the view that the general public in UAE are "being overburdened by debt."

"Using bonus to pay off debt is a wise and suitable step towards becoming debt-free. People who are foregoing immediate pleasures for improving their financial situation are likely to remain free from debt traps in the future."

However residents have been warned against leaving their money in the bank because the low interest rates can mean they are losing their hard-earned savings to inflation.

“Another concerning trend is the number of people leaving their bonus in the bank. With UAE inflation running at four per cent and low bank deposit interest rates, the net effect of this investment strategy could be a loss in real terms. Try to maximize the returns from your hard-earned bonus,” said Dawson.