Around 86 per cent of the companies in the GCC are planning to increase their headcount in the next three years, according to a new survey by investment service provider SEI.
The majority of small companies in the region are aiming to grow staff numbers by more than 10 per cent, indicating rising optimism among businesses.
Business confidence has grown in the UAE with more than 45 per cent of the respondents expecting the Expo win to have a positive impact on their growth plans.
The poll also noted that 72 per cent of firms in the region expect to provide an annual salary increase of more than five per cent.
However, growth in headcount and salaries has further raised the end of service benefits (EoSB) liability for companies, the report said.
“The report shows a continuing trend that employees are staying longer with their employers, resulting in a greater per cent being eligible for higher EoSB payout,” SEI Investments said.
“Coupled with other cost increases, such as housing and schooling, CFOs are under pressure to manage the costs in order to maintain profitability. In turn, this pressure has translated into HR executives being challenged to find more innovative ways to recruit and retain top talent versus the historical approach of increasing base salaries and cashbonuses.”
The survey also found that companies are not using the EoSB liability effectively as a retention tool with just seven per cent of the respondents using it for retention purposes.
But the companies polled also indicated a growing appreciation of the benefits of using EoSB to generate loyalty among employees with 46 per cent of respondents stating their interest in such schemes.
“Businesses are clearly under pressure to balance the pressure of growth and profitability,” said Jahangir Aka, managing director of SEI Investments, Middle East.
“The rising costs of housing and staff are forcing companies to shift away from traditional methods of reward, which have been based primarily on cash bonuses, to more creative alternative approaches.
“EoSB is one of the largest payments to employees, yet in most companies it is under-utilised for attracting or retaining. It is often not even highlighted as a core component of total reward. In other parts of the world stock options are utilised as deferred bonuses, but these aren’t available to many in the Middle East,” he said.
The SEI survey was conducted over May and June and was completed by 142 senior executives from local and international companies in the GCC.
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