High costs could drive expats out

UAE, 2 May 2005

RISING house rents, stagnant salaries and diminishing perks could lead to increased attrition rate in the UAE establishments as expatriates reeling from financial problems could seek employment in countries better positioned in these vital parameters, a research on the country's job market has revealed.

A survey conducted by GulfTalent, a Dubai based online recruitment service for professionals, showed that salaries, especially in the private sector, have hardly kept pace with most employees untouched with any upward revision of their remuneration while cost of living have been rocketing.

While 20 per cent of the employees who responded to the survey indicated that they were working towards switching employers, 15 per cent were prepared to seek a pay rise from the existing employer.

But the more startling fact is that at least nine per cent of the respondents said they were leaving UAE since they could not afford a life here.

26% rent hike

The report titled "UAE Rent Inflation and Impact on the Job Market", that materialized from a survey covering 500 people employed and residing in the UAE, revealed that rents in 2004 in creased by 26 per cent on an average while pay hikes, if at all, have not crossed 1.5 per cent on an average. Thee average increase in multi-nationals' salaries stood at two per cent, but it was a mere 8 per cent with local companies.

The immediate fallout is that the respondents set aside an average of 36 per cent of their salaries to pay their house rent from 26 per cent they paid the previous year.

Only the government departments responded to the rising cost of living with 25 per cent hike for UAE nationals and 15 per cent increase for expatriates recently.

The private sector has by and large ignored the discomforting murmurs for salary hikes.

As being witnessed, and with only four months gone in 2005, there has been no respite from the rising rents that continue to climb vertically.

The result is a substantial fall in the disposable in come of individuals who juggle with low salaries, high house rents, increasing cost of living, children's school fees and medical expenditure, among other essentials.

Dubai saw the highest increase in house rents at 27 per cent closely followed by Sharjah at 25 per cent and Abu Dhabi at 23 per cent. Recent reports suggest that rents have been shooting up in Ajman, Ras Al Khaimah and Fujairah too.

Considered the cheaper alternatives to Sharjah and Dubai till recently, rents in these emirates have also touched new highs since residents facing budgetary crisis have been relocating to the relatively cheaper emirates.

Among the short-term remedial options listed by the respondents were sending their families back to their home countries to save on rents, cutting personal spending, moving to cheaper accommodation in and out of the emirate, tapping into savings or even getting a part-time job to supplement income so as to survive.