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Outlook 'not good' for salary hikes in GCC this year

DUBAI, March 26, 2018

GCC professionals predict that compensation and benefits (C&B) outlook will be much more cautious in 2018, although vehicles for employee engagement, training and development are all receiving greater attention.
Predicted lower level salary increases are significantly down, with 20.96 per cent of companies expecting to give only a 3.5 per cent increase or less, said Informa’s sixth annual GCC Compensation and Benefits Trends Report. 
It said 10.51 per cent of companies expect to implement pay freezes and 3.36 per cent believe that they will have to reduce salaries. Similarly, fewer companies are willing to experiment with adjusting their healthcare provision package (a vital C&B consideration from last year) or offering wellness programmes. 
The spectre of VAT implementation is also adding to the caution permeating 2018’s C&B landscape. The majority (58.58 per cent) of companies will not consider VAT when deciding whether to increase salaries in 2018/2019, while only 14.48 per cent said that VAT would be an influencing factor. The remainder (26.96 per cent) are still undecided about the impact of VAT on salaries, it said.
However, plenty of GCC companies are still planning to develop dynamic C&B strategies this year. “Improving employee engagement” has become the top area of focus for 2018, mentioned by 45.34 per cent of the survey’s participants. This is closely followed by “improving employee retention”, which is up to 41.18 per cent.
To satisfy these focus areas, more companies are investing in training and development programmes, pension option offerings and vehicles to improve the link between employee performance and pay. Additionally, instances of larger pay increases are on the rise, as 17.23 per cent expect to increase salaries by between 5 per cent - 6.5 per cent this year, the study said. - TradeArabia News Service

Tags: Salary | Employees | Staff |

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