Expat employees lose out on savings despite pay rise
UAE, 1 Oct 2007
Dubai: Employees in the Gulf are losing 23 to 31 per cent of their earnings depending on the currencies in which they are saving and spending due to the rising cost of living and the steadily weakening US dollar to which Gulf currencies are pegged.
In the UAE particularly, expatriates are reeling from the rising cost of living and are also paying a heavy price when remitting savings home due to increasingly adverse exchange rates.
Exchange rate data for the last 19 months suggest that expatriates living in the UAE lost 12 to a staggering 21 per cent as a result of exchange rate fluctuations alone.
In simple terms this means their earnings have lost about 12 per cent in purchasing power if one is remitting savings in Indian rupees, 15 per cent in Philippine pesos and 20 per cent and 18.7 per cent in euros and pounds sterling respectively.
Shortage of skills
A nearly 10 per cent increase in average monthly wages in the GCC countries in the past year has done little to offset these losses, according to analysts.
The fact that GCC living costs are climbing faster than wages has also resulted in a skills shortage that could hinder the region's ability to reduce its econ-omic dependence on oil, says a leading recruitment firm.
Private sector salaries increased nine per cent on average in the GCC over the 12 months to August this year and 10.3 per cent in the UAE, according to figures released by GulfTalent.
In comparison, inflation was 9.3 per cent in the UAE last year and climbed to a high of 14.8 per cent in Qatar.
Analysts have further warned that the diminishing value of Gulf pay packets - exacerbated by the depreciation of dollar pegged currencies - has hit staff recruitment and retention over the last year.