Cautious outlook despite healthy 2012 salary forecast

Mercer’s 2011 total remuneration survey results shows nearly every company surveyed in three key markets – Saudi Arabia, UAE and Qatar – plan to give pay rises and hire more people during the coming year. More than three hundred firms across all industries were surveyed and the overwhelming majority predicts raising salaries in the coming year by between 5.5% (UAE) and 6% (Qatar and Saudi Arabia).Yet according to Zaid Kamhawi, who heads Mercer’s survey practice across the Middle East, the optimism around compensation and business performance – which heralds a period of increasing competition for talent – is offset by caution around the possible impact of regional and global events on economic activity and investment. “Broadly, economic activity across the MENA region has been solid in most areas but confidence and optimism has been buffeted by pockets of social unrest, in what has been a period possibly unique in the Middle East in the modern era,” he said.“Combine that with uncertainty about events in Europe and the US economy, and it is unlikely that 2012 will bring about any change in the short term, although as always there will be pockets of prosperity like here in the GCC.”Mr Kamhawi said companies are increasingly looking at compensation trends and predictions to help with budgets and planning, and are hungry for information, insights and market practices at a time when the global and regional economic outlook is far from certain.Mercer’s Total Remuneration Survey (TRS) data also showed consumer and durable goods sectors that led the way in salary increases in 2011 are set to continue the trend in 2012, along with UAE-based high tech firms.In the UAE, the remuneration gap between Abu Dhabi and Dubai is still evident. Mercer’s survey shows annual base salaries in Abu Dhabi as 7.5% higher on average across all employee levels compared to Dubai, and average housing allowance in Abu Dhabi to be 21% higher compared to Dubai.Mercer’s analysis also uncovered further evidence of a distinct cash gap between the levels of guaranteed income paid to employees in local companies versus those working in multinational firms. “In the UAE, local firms pay on average 17% more than multinational firms, and it widens towards lower level positions. On average, base salary payments in the UAE are on par but in terms of allowances, the average difference is 44% higher in local firms,” said Mr Kamhawi.In Qatar that gap is even wider, with local companies paying on average 43% more than multinational companies. On average, the base salary gap is 26% and in allowances the average difference is 60%.This is largely because of the diverse range of allowances local firms pay. Multinational firms offer a range of other elements – many of them not directly linked to compensation – that employees and candidates find valuable and that companies use as tools to attract, retain and develop their talent.” said Mr Kamhawi.“But the existence of the gap continues to serve as a reminder that the fight for good talent will only intensify in the short term.”The annual Mercer survey covers a vast range of sectors from consumer goods, energy and high-tech to durable and manufacturing. It highlights compensation trends from top executives to the administrative level. Mercer conducts the same survey across more than one hundred countries globally and covers over 450 benchmark positions.