Qatar's decree on pay will transform the labour market and have wider economic impacts according to a new report from the Hay Group released today. Qatari nationals stand to receive double the amount of fixed pay of a non national, bringing new dynamics to the private sector said the consultancy.
Hay Group's annual report on compensation and benefits analyses salary information of 41,000 employees from 117 organisations in Qatar comprising a wide spectrum of industry sectors. Oil and gas and financial sectors are highlighted in the report as those already implementing changes to their reward policies.
Implications for the Qatari economy
The decree, stating a 60 per cent pay rise for Qatari nationals in the government and oil and gas sectors, has a direct impact on Qatarisation initiatives and the wider Qatari labour market said Harish Bhatia, Manager of Reward Information Services at the Hay Group:
"The decree will have a positive multiplier effect on the economy and demonstrates how the government is investing in its people. More spending and consumption will bring inflation and a boost to the economy. It will be interesting to see how supply and demand plays out in the labour market which will become more complex as a result."
"Our study finds that the oil and gas sector pays 100 per cent higher than the market average, financial services also pays above the market average meaning these sectors are more attractive to job seekers. Together, these sectors employ 75 per cent of the Qatari nationals in the workforce and employers in these sectors face an immediate increase in payroll costs."
"The decree is fuelled by an intention to distribute the wealth of the nation but private sector employers are concerned with how they will be able to compete with the government's initiatives in attracting nationals into their workforce. Employers in the private sector will face a challenge in ensuring Qatari nationals play a part in the exciting phase of development that Qatar is in midst of." he said.
Managing expectations and employee mindsets
On average there is now a 98 per cent pay gap between the fixed pay of Qatari nationals and non-nationals according to the report. 
Mr. Bhatia expects that private sector companies will also make some changes to reward packages for non nationals to manage expectations:
He continued "Hay Group's experience in other GCC countries which have been through similar government initiatives shows that industry is obliged to follow suit, with the country's key sectors leading the way."
"With higher pay, which will give rise to higher spending and consumption, we would expect the private sector to react. In addition to local market forces, a number of multi-nationals have to remain in-line with their global philosophy of pay equally regardless of nationality."
"From a human resources perspective an across the board pay increase is entitlement driven, rather than performance driven. A sudden increase without differentiation based on performance may increase the cost of labour without the corresponding benefit to the organisation."
Wider implications
"Elsewhere in the Gulf we have seen governments awarding one-off bonus payments or subsidies in recognition of the peoples' contribution to economic growth. Qatar is looking at a long term commitment with this decree, which therefore requires long term commitment from organisations." Mr. Bhatia concluded.
Pay in Qatar is the highest in the GCC according to the Hay Group, paying 20 per cent more on average than elsewhere in the Gulf. With further changes following the decree, this will be intensified. This announcement is an indicator of Qatar's appetite for recognition on the global stage.
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About Hay Group
Hay Group is a global consulting firm that works with leaders to turn strategies into reality. We develop talent, organise people to be more effective, and motivate them to perform at their best. With 84 offices in 48 countries, we work with over 7,000 clients across the world. Our clients are from the public and private sector, across every major industry, and represent diverse business challenges. Our focus is on making change happen and helping organisations realise their potential. For more information, please visit www.haygroup.com/uae.
For further information:
Miss Joanne Rogers
M: +971 50 554 1663
E: joanne.rogers@haygroup.com
© Press Release 2011
