Qatar tops pay rise list in the GCC

UK, 5 Sep 2006

DUBAI (Reuters) - Workers in Qatar notched up the biggest pay rise in the six Gulf Arab states with an average increase of 11.1% compared to 7.9% last year, a survey showed.

This is the second year in a row Qatar, where rapid economic growth is driving up inflation, topped the GCC list, according to the survey conducted by the Dubai-based online recruitment firm GulfTalent.

Private sector wage growth in the six states accelerated to an average of 7.9% in the past year with banking and construction sector employees benefiting the most, the survey showed.

Soaring costs of living, a tight labour market and rapid economic growth in India, home to many of the Gulf's expatriate workers, were helping drive wage inflation, it said.

The survey showed the rate of salary increases accelerating in Qatar, the United Arab Emirates and Kuwait, but slowing sharply in Saudi Arabia.

Omani and Bahraini workers had the smallest increases as was the case in 2005 when the first survey showed that salaries rose across the Gulf by an average of 7%.

"Economic growth and growing competition for talent (were) key drivers of pay rises, along with spiralling living costs in parts of the region, particularly Qatar and the UAE," the survey said.

The pay of UAE workers increase by 10.3% against 6.5% last year while in Kuwait wages rose by 8.0%, up from last year's figure of 6.9%. "While there was continued inflow of expatriates into the Gulf, particularly Dubai..., some expatriate residents were leaving the region as high inflation had eroded their saving potential," GulfTalent said.

Government efforts to create private sector jobs for citizens and reduce dependence on expatriate workers were leading to a tighter labour market. Geopolitical uncertainty including concerns raised by the conflict that erupted in Lebanon in July was keeping expatriates from some countries away, the survey said.

"The Gulf's tightening labour market was forcing employers to reach out to new sources of talent..," the survey said, pointing to more recruitment from China and Malaysia as well as among women, traditionally under-represented in the workforce.

With the economic boom in India driving up salaries there, the survey showed that Gulf-based employers had to offer some Indian professionals substantial pay hikes, reducing the gap with their Arab and Western counterparts in the region.

The only significant exception to the trend was Saudi Arabia, the Gulf's largest economy. Private sector salaries in the kingdom increased 6.5% this year compared to 7.4% in 2005, the GulfTalent statement said, offering no explanation.

"Sectors enjoying the highest pay rise in the survey were construction and banking - consistent with last year's results and reflecting the sectors' strong growth. Healthcare and education registered the lowest increases," it said.

Wages in Bahrain increased by 6.4% this year compared to 6.3% last year, while the figure in Oman was 5.6%, down from 5.9% last year. GulfTalent's study was based on a survey of 3,000 professionals in the Middle East, as well as interviews with senior executives and human resource managers.