Saudi salaries forecast to increase as economy recovers from pandemic

More than half of employers expect to award pay rises, with most increasing earnings by up to 5%

A Saudi man shows Saudi riyal banknotes at a money exchange shop, in Riyadh, Saudi Arabia January 20, 2016. Image used for illustrative purposes

A Saudi man shows Saudi riyal banknotes at a money exchange shop, in Riyadh, Saudi Arabia January 20, 2016. Image used for illustrative purposes

REUTERS/Faisal Al Nasser
JEDDAH: More than half of Saudi employers and employees expect salaries to increase this year, according to a survey by global agency Hays.

The 2021 Saudi Arabia Salary & Employment report released on Monday was based on a survey of about 600 Saudi employers and employees in late 2020.

Despite the coronavirus (COVID-19) pandemic’s negative impact on salaries last year, 39 percent of surveyed employees said they received a pay increase, while only 9 percent said their salary was reduced, compared with 4 percent in 2019.

The report forecast that most salaries will remain the same, but Saudi employees were more optimistic, with 56 percent of respondents saying they expect an increase, 41 anticipating no change and just 3 percent believing they will get a pay cut.

The survey found that 53 percent of employers anticipate they will award pay raises to staff, with most increasing earnings by up to 5 percent.

Chris Greaves, managing director of Hays in the Middle East, said that salary offerings have always been fundamental to attracting workers to the Kingdom.

He said that there was likely to be more movement of employees in the labor market this year, due to the upcoming Iqama reforms, which allow expat employees working in private sector to freely change jobs without the employer’s consent. As a result, more expats will be willing to leave an organization based on pay offered by another.

Hays said that salary was the leading factor in 44 percent of professionals looking to move jobs in the next 12 months.

“Employers will need to be competitive with salaries, paying more than others to secure the top talent,” Greaves said.

Around 21 percent of businesses said they were either unaffected or positively affected by the crisis, but 33 percent said they had reduced staff due to reduced revenues from March 2020.

However, 81 percent of employers said they were already in recovery, or their business is as usual or at a growth phase. Moreover, 62 percent are expecting business activity to increase in 2021.

About 60 percent of employers expect staffing levels in their organization to increase in the next 12 months, while 29 percent of respondents said they had increased head count at the end of 2020 compared with 12 months earlier.

Over the next 12 months, Hays said it expected to see a lot of recruitment activity in the life sciences, health care, manufacturing and real estate sectors. IT is also expected to see high demand, as Hays said there was a shortage of skilled Saudi workers in this sector.

Greaves said that although organizations were forced to make redundancies and reduce salaries to maintain their operations amid the pandemic, this was primarily only during the height of the pandemic. “When looking on a global scale, Saudi Arabia’s job market has fared very well,” he said.

The report also showed that pay cuts and redundancies had been lower in Saudi Arabia than other countries in the region. For instance, 18 percent of professionals in the UAE faced salary decreases compared with 9 percent in Saudi Arabia. Almost half of employers in the UAE (45 percent) were forced to lay off staff compared with 32 percent in the Kingdom.

“Thanks to the government’s investment in non-oil revenue streams in accordance with Vision 2030, many organizations have continued to operate in the country successfully and there is much positive sentiment ahead,” Greaves said.

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