RIYADH: Saudi Arabia continues to lead the region in salary increases, according to a GCC-wide survey of 600 multinational companies and locally-owned conglomerates by Aon, a leading global professional services firm providing a broad range of risk, retirement, and health solutions. The largest study of its kind in the Gulf region showed that, just as in 2016, actual salary increases remain lower than forecasted, influenced largely by a slow economy and low oil prices.
Saudi Arabia recorded an increase of 4.4 per cent, followed closely by UAE and Kuwait (4.3 per cent), and in Qatar (4.2 per cent). The increase in Bahrain and Oman was 3.9 per cent, the report said. The region-wide value added tax (VAT), a tax on consumption, of 5 per cent to be implemented in January 2018 is expected to help improve GDP growth; however, it will add to the rising inflation in the region, leading to cost pressures. While employers choose to remain conservative in the projected salary increase of 2018, we may witness an upside in the actual salary increase, thanks to an improving economic situation as a result of increased government spending, stabilised oil prices, and the effects of economic transformation programmes, the report said.
Saudi Arabia, Kuwait, and Qatar have the highest salary increase projections for 2018, at an optimistic 4.5 per cent, the report said. In the UAE and Oman the hike is expected to be 4.3 per cent and in Bahrain 4 per cent. Actual salary increases this year are highest for the Life Sciences (5.1 per cent) and Hi-Tech sectors (4.6 per cent), while the Construction/Engineering and Transportation/Logistics/Shipping Services sectors suffered the lowest salary increases at an average of just 2.4 per cent. This is similar to last year, where Life Sciences was also a highest paid sector (together with Consumer Products) and Construction/Engineering experienced the lowest salary increase (together with the Energy sector), it said. Robert Richter, GCC compensation survey manager, Aon Hewitt Middle East, said: “Despite lower than projected salary increases this year, there is optimism in the region over Saudi Arabia Vision 2030 and Expo 2020 — with the potential for thriving new industries and a significant level of job creation in the region as a whole. With the stabilisation of oil prices, we can also expect the economy to stabilise and strengthen in the coming years.” Aon has been conducting the salary increase survey on an annual basis across the globe for 30 years, and launched it in the Middle East for the first time in 2012. Aon is a leading global professional services firm providing a broad range of risk, retirement and health solutions.