| 31 Dec 2008 |
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Salaries may Rise but not as Much
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DUBAI - Salary increases across the GCC countries are predicted to show a downward trend in 2009 as many firms across the board are viewing salary rationalisation as a cost cutting solution in the backdrop of the economic meltdown, a research report by a Kuwait-based firm said.
The UAE and Qatar, which were at the top of the rankings up to August 2008 with average pay increases of 13.6 per cent and 12.7 per cent respectively will show a downward trend of 10.9 per cent and 10.2 per cent in wage hikes respectively due to the recent economic downturn, said the report "Global Financial Crisis and GCC Salary Trends" published by the Markets Insights Division (MID) of Advantage.
In other GCC countries like Bahrain, Kuwait, Oman and Saudi Arabia, the percentage of salary increase is also forecast to fall to 8.4 per cent, 8.1 per cent, 9.7 per cent and 7.8 per cent respectively due to the prevailing economic downturn with many job cuts particularly in investment, banking and real estate sectors.
"Be it firms like investment companies or oil support services companies, we are now witnessing a slash in the compensation for new hires, layoffs and change of recruitment plans as more and more firms are resorting to this method. We are identifying this trend across various sectors especially banking, financial services, and insurance," said Safa Al Hashem, Chairman and Managing Director of Advantage.
"However, this is a good time to be a recruiter in the labour market. It's a great advantage to be highly selective and acquire the talent that will help your company survive," said Safa Al Hashem.
According to the report, employment expectations in the manufacturing and service sectors remain abysmal while banking and finance sectors are the most adversely affected due to the economic turmoil in the last quarter of 2008. The salary increase forecasted of year 2009 for the banking and investment sector is 9.2 per cent, which is lesser than last year salary increase (12.2 per cent).
The real estate (development, construction) sector is the worst affected sector, after banking and finance sector. The forecasted salary increase for 2009 is 10.3 per cent that is marginally higher than the pay increase of other sectors in GCC.
The FMCG (fast moving consumer goods) and oil & gas sectors, which were enjoying the steep increase in their salary increases until the third quarter of 2008, 11.9 per cent and 11.0 per cent respectively, are expected to record a fall-down by 8.3 per cent and 8.9 per cent respectively due to a sharp decline in crude oil prices in the international market and the changes in consumer spending behaviour across GCC. Healthcare sector stood at the bottom of the rankings for the last two years (8.1 per cent in 2008) and the trend is expected to be same during 2009 (6.1 per cent) as well.
Hiring expectations will drop to the lowest levels in four years with manufacturing and service sectors planning to cut payrolls rather than add jobs. Vacancies in manufacturing and services are at the lowest during November 2008 in four years.
In November, for the first time in four years, more recruitment firms and placement agencies reported less trouble with recruiting compared to those that reported increased difficulty in the previous years.
© Khaleej Times 2008
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Community Comments (1)
I believe as a matter of urgency the re-engineering process has to be started for all businesses/organizations in this global crisis. Through this exercise the businesses/organizations could achieve their target.
So, please don't go with employee lay-off process as well as business / project halting and or close-out. You may regret later on.
In general, the risk management is a function which is aimed at protecting the organization, its people, assets and profits, against the adverse consequences of pure risk, and is more particularly aimed at the reduction of the severity and variability of the losses.
So, an integrated approach along with project, programme and portfolio managements shall be considered for risk management since studies shows the impact of various risks causes not only economic loss, but also human suffering.
Kindly go with risk management today as New Year resolution, instead of pay-cut, employee lay-off and business / project halting and or close-out.
See my comments here as well http://www.zawya.com/story.cfm?id=ZAWYA20081225094040&l=094000081217
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