Rising costs: GCC firms increasing allowances
Dubai, April 29, 2014
Rising cost of living in the GCC is forcing companies to increase allowances and benefits to staff as they battle to retain their talent, a study said.
Companies across the GCC are recognising the need to introduce new measures and are starting to shift their budget allocation to employee allowances and benefits, said latest GCC Allowances and Benefits Survey conducted by Aon Hewitt, the global talent, retirement and health solutions business of Aon.
The most commonly provided allowances and benefits in the GCC are housing, transportation, children’s education assistance and home leave benefits.
The largest report of its kind in the GCC, the Aon Hewitt Allowances and Benefits Survey is based on an analysis of over 100 companies across different sectors, a statement said.
The findings revealed that:
Children’s education allowance:
• Children’s education assistance is currently highest in Qatar and Kuwait; this can be as high as $17,000 and US$16,000 per child respectively.
• Children’s education assistance eligibility has also increased dramatically in the GCC, with almost half of the companies across the region now providing children’s education assistance to other staff as well as management
• Children’s education assistance is usually capped
• Approximately one third of companies across the GCC award the allowance as a cash payment, the remainder settling school fees directly.
• Housing allowance across the GCC is highest in Qatar and ranges between $21,000 and $53,000; this is closely followed by the UAE which ranges between $20,000 and $53,000.
• Housing allowance is approximately 25 per cent of the basic pay across the GCC, however this is 35-40pc in the UAE and Qatar.
• Housing allowance remains stable despite rental prices across the region increasing.
• The survey found that housing and transportation is typically provided on a monthly basis as a cash payment whereas children’s education assistance and home leave benefits are usually provided at actual cost of the school fees or the cost of the ticket respectively.
• The home leave benefit is usually provided as a ticket once per year to the country of origin covering the employee, spouse and children. Some organizations also provide the benefit as a cash payment in which case the payment is based on the average cost of the ticket.
• Across the GCC allowances are typically provided based on seniority, with the amount varying by up to 100 per cent, based on employee category.
The report also measures, furniture and relocation allowance, end of service benefits, life and accident assurance, long term disability, private medical benefits, loans, mobile phones, and annual leave entitlements.
Robert Richter, compensation survey manager at Aon Hewitt Middle East, said: “It is clear that inflationary pressures are being felt throughout the GCC and companies are starting to rethink their allowances and benefits allocation strategy. At Aon Hewitt we help companies attract and retain the right talent and inevitably some companies will not be able to afford to keep up with the change in demand, resulting in the migration of talent between organizations. However, we do anticipate that organizations will start revising their allowances such as housing in the interest of talent retention.” - TradeArabia News Service