Soaring rents force job switch
The Gulf Today (UAE), 23 March 2005
FACED with high rents for residential accommodation, over half of all senior executives in the UAE are planning to demand a pay increase or switch to another company, according to a survey conducted by a Dubai-based online recruitment service for professionals.
The survey found that while rents this year were on a average 26 per cent higher than the previous year, average salaries had only risen by 1.5 per cent in the same period, causing a substantial shortfall in most employee's incomes.
According to the survey results published by GulfTalent, Dubai had the highest average rent increase at 27 per cent, followed by Sharjah with 25 per cent and Abu Dhabi in third place with 23 per cent.
Nationwide, rents for apartments went up by around 24 per cent, while room rents shot up at a staggering 31 per cent.
Salaries continue to stagnate, with most respondents reporting no increase in pay. Average wage increase for the country stood at 105 per cent, with public sector leading the increase at 208 per cent, followed by multinationals at 2.0 per cent and local companies at 0.8 per cent.
Rather surprisingly, senior executives experienced a below-average increase of just 0.7 per cent, possibly due to the increasing number of international executives now willing to relocate and work in the UAE.
When asked how they planned to deal with the increased rent pressure, responses varied significantly. Thirty-five per cent of all people polled by GulfTalent planned to switch jobs or ask for a pay rise, while this figure for senior executives stood at 55 per cent. Although the possibility of being "banned" was a concern, many were still willing to take a chance.
"Our data suggest that rent as a percentage of salary has increased from 26 per cent to 32 per cent this year. This represents a substantial fall in net disposable income, which may have repercussions for the rest of the economy," a spokesperson for GulfTalent.com said.
"There is likely to be increased turnover in the job market, particularly at the senior level where candidates are more mobile. More disturbingly, we are finding that many people are having to take loans or delay their repayments in order to deal with hike and this may lead to increasing default rates for the banking sector in the next 12 months," the GulfTalent.com spokesperson said. Other common reactions revealed in GulfTalent's survey were to send families back home or relocate to another emirate. About 6 per cent of Dubai-based respondents planned to relocate to Sharjah, while 7 per cent of those in Sharjah planned to move to Ajman.
For women respondents, the most popular choice was to cut their spending, negotiate a pay rise with their employer or negotiate a discount with the landlord.
Male respondents, on the other hand, would primarily switch to another employer, ask for a pay rise, or leave the UAE.
Responses also varied across emirates, Twelve per cent of Sharjah residents planned to send their families back home, compared to an average of 5 per cent in Dubai and Abu Dhabi. Over 24 per cent of those working in Sharjah and Abu Dhabi planned to ask for a pay rise, compared with just 14 per cent in Dubai, reflecting the greater bargaining power of employers based in Dubai.