Dubai: Are you stuck in the same job? Has your salary remained stagnant over the last few years? Is your cost of living rising disproportionately?
If your answer is in the affirmative, you could probably take comfort in the fact that you are not alone. As recruiters and HR consultants point out, the disconcerting trend is evident everywhere - across positions, industries and geographies.
Rakesh Rachwani, founder, Compass Financial Solution, says there are many reasons why this is happening. “The ready availability of people with similar skill sets has resulted in the stagnation of salaries. Moreover, the Middle East has faced a tough period over the last year and a half, especially with oil prices being at their lowest, indirectly affecting government budgets and spending plans. In the UAE, the rise in the cost of visas, infrastructure, government fees, among others, has not helped in timely appraisals of employees. Recent policies like the mandatory health cover for all employees have also added pressure on company budgets.”
He says, “Basic health insurance costs employers Dh600 per annum per employee, but most executive schemes go up to Dh2,500 per year based on the plan. Visas, which must be renewed every two years instead of three earlier, cost anywhere between Dh7,000 and Dh10,000, depending on the company category. The current economic conditions have played a big role in employers having to squeeze their budgets inadvertently making them invest less in their employees and team members.”
According to Vishal Mahtani, serial entrepreneur and CEO, Price Global Group, insurance costs have increased the basic cost per employee. “As there is no real revenue to justify this cost, employers are now more sceptical about who they hire and how can they best maximise the productivity of existing employees.” He says, “For salaries to increase, companies need to see an increase in their revenues. The general trend in the UAE shows a decline in business activities including sales and revenues. This leads to companies either having to lay off their employees or stagnate their current payouts to manage lower revenues.”
Jaya Bhatia, HR advisor, trainer and career coach at JobhuntGulf.com, says, “The region is currently going through financial changes due to corrections in the oil and gas prices. Finances are a cause of concern for corporates in this region, due to which a lot of companies and industries are exercising cost-cutting since a year now.”
She said, “Industries such as food and beverage and hospitality are reporting growth in turnover, but there has not been a steady rise in profit margins due to market competitiveness.” But benefits like insurance, transport, accommodation and other incentives have increased in these sectors by four to nine per cent this year, she says, adding salaries may rise by end of this year.
Mahtani says, “Managing expenses has turned into a firefighting effort. At this point, businesses evaluate employees based on their performance and the value they add to the company. Those unable to add real value or are proving to be a liability are often the employer’s first candidates during a lay-off situation. Employers often justify the lack of incentivisation by the lack of performance by the employee.”
But what has this meant for the employees? Rachwani says stagnant salaries and growing costs of living have impacted savings. “Expenses like utilities, housing, education, medical and fuel prices have gone through the ceiling in the last decade. According to Dubai Statistics Centre, the inflation rate in Dubai was 1.61 per cent in the first quarter of last year. However, housing and utility costs, which make up 43.7 per cent of consumer expenses, rose 4.15 per cent during the period compared with the first quarter of the previous year, while the prices of food and beverages went up by 2.96 per cent. The cost of education climbed 4.83 per cent in Dubai in the first three months last year, compared with the same period the previous year.”
Switching jobs is not easy as alternatives are hard to come by. While deserving candidates are always head-hunted, the dilemma lies in the excess of candidates and limited opportunities, setting off the balance.
“According to the World Bank, the global economy is going through its least productive and growth phase. The move is due to sluggish growth in advanced economies, stubbornly low commodity prices, weak global trade, and diminishing capital flows.
“Such an environment is not conducive for the employment market until situations improve and we are out of this global downward curve,”added Rachwani.