Big salary increase for federal employees

The salary increase for UAE nationals and expatriates announced by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan yesterday was unanimously welcomed by residents.

"It will also help increase savings and investment, and activate the economy, without impacting the budget due to anticipated high oil revenues," economists and bankers told Gulf News.

They were reacting to news that Shaikh Khalifa has ordered a salary raise for UAE nationals and resident expatriates, including civilian and military personnel working in UAE federal ministries as well as in local government departments in Abu Dhabi emirate.

Effective May 1, UAE nationals working in federal government institutions will receive a 25 per cent increase on their basic salary, and non-UAE nationals a 15 per cent rise.

Shaikh Khalifa hoped the move would ensure decent living conditions for UAE nationals and expatriates.

Hailing the decision, Shaikha Lubna Al Qasimi, Minister of Economy and Planning, warned businesses against trying to take advantage of the decision by increasing commodity prices.

"The Ministry of Economy and Planning will monitor commodity prices to ensure that prices are not increased. Necessary legal measures will be taken against those who would try to take advantage of the situation," she said.

The price control committee which includes representatives of the ministries of Economy and Health, the municipalities and chambers of commerce will hold a meeting to assess the situation, she said.

Economists said the raise will boost economic activity. "Salary raises are good for the economy ... They will result in a higher standard of living and this is good particularly for UAE nationals," said Dr Mohammad Al Asoomi, a Dubai-based economist.

Dr Mohammad S. Amerah, an Abu Dhabi-based economist, said the move will impact positively on the economy. "It will drive up demand due to higher purchasing power."

Daniel Hanna, an economist with Standard Chartered Bank, said the move was prompted to help people cope with the higher cost of living. "Given the level of oil revenues, the increase will be absorbed into the budget," he said.

Khalid Bin Kalban, managing director and CEO of Dubai Investments, said: "The move will improve the purchasing power of government employees."

A Dubai-based banker, however, felt a significant percentage of the increased salaries would go towards offsetting the increased expenses of residents rather than result in more savings.