Salaries in the UAE increased 5.5 per cent this year, but this growth may become slower in 2020 due to the rise in inflation, according to the latest salary trend report released by ECA International.
It is predicted that next year's real salary increase of 2.9 per cent in UAE will be the highest in the GCC region followed by 2.4 per cent in Saudi Arabia, 2.3 per cent in Qatar and 2.2 per cent in Oman.
In 2019, Saudi Arabia recorded 5.8 per cent increase in real salary, followed by 5.5 per cent in the UAE, 4.2 per cent Qatar and 3.2 per cent in Oman.
"Inflation in the region is currently very low and understandably that is dominating the news now, but if the experts are correct then prices will start to rise again next year and this will eat in to the salary increases seen by staff in the region," said Steven Kilfedder, production manager at ECA International.
International Monetary Fund has predicted in its latest World Economic Forecast that following negative inflation in the UAE, Saudi Arabia and Qatar in 2019, consumer prices will rise in 2020. IMF forecast 1.2 per cent in the UAE and 2.2 per cent inflation in Saudi Arabia and Qatar for next year. Overall inflation for Middle Eastern oil exporters will rise from 8.2 per cent in 2019 to 9.1 per cent in 2020.
"Inflation is expected to rise throughout the Middle East as the stable commodity prices boost domestic demand. This has seen all of the surveyed Middle Eastern nations drop in the rankings compared to last year and Saudi Arabia, UAE and Qatar have all dropped out of the global top ten as rising inflation cuts into the real salaries of workers in the region," said Kilfedder.
Chris Greaves, managing director at Hays Middle East, says when it comes to employees' attraction and retention, the first thing that comes to mind for many is salary but that is not the case.
"Salary is the main factor keeping employees in their current role or the reason x employee is leaving is because they have been offered a higher salary at another company. However, we know - from conversations we have had with our candidates and findings in this research, that this is simply not the case. In fact, our survey has found that salary ranks as only the third most important reason why working professionals in the GCC are open to new job opportunities, and the fourth most significant reason why they left their previous employer," says Greaves.
Hays survey found that only 10 per cent workers in the GCC look to start a new job due to salary while just nine per cent left the company due to salary.
According to ECA International, Asian nations lead the way again for real salary increases, globally with 13 out of the top 20 increases being seen in Asian nations, and all of the top five. ECA forecasts biggest real salary increase will be witnessed in India at 5.4 per cent followed by Vietnam (5.1 per cent), Indonesia (4.6 per cent), Cambodia (4.2 per cent) and Thailand (4.1 per cent).
"Salaries in India are set to rise significantly, with the 5.4 per cent increase almost four times as high as the expected increase in Hong Kong. Despite inflation rising slightly from 2019 and the economy slowing slightly, workers based in India can expect to see another bumper increase to their salaries. However, unless growth picks up again salary rises of this scale may not be sustainable in the longer term" said Quane.
It will be a very different story for their neighbours Pakistan in 2020 though, who are the only Asia-Pacific nation predicted to see a decrease in their real salary.
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