Gulf salaries rise by 9 per cent

Intense competition and a depreciating U.S. dollar drive increases

Private sector salaries in the six countries of the Gulf Cooperation Council increased at an average rate of nine per cent compared to last year, according to a new salary survey by job website

The third annual survey of salary trends in the region Gulf Compensation Trends 2007 surveyed 18,000 professionals in Oman, the United Arab Emirates (UAE), Qatar, Bahrain, Kuwait and Saudi Arabia.

Salary increases by country

CountrySalary increases (2006 to 2007)
Oman11.0 %
UAE10.7 %
Qatar10.6 %
Bahrain8.1 %
Kuwait7.9 %
Saudi Arabia7.7 %

Oman registered the biggest jump, from 5.6 per cent last year to 11 per cent this year, driven in part by a 15-per-cent pay rise for public sector employees. The government’s decision earlier this year to allow expatriates to change employers has dramatically increased staff attrition rates, further adding to the pressure on firms to increase salaries.

The UAE and Qatar, which are experiencing double-digit inflation this year, remain near the top of the rankings. The pay of UAE professionals increased by 10.7 per cent compared to 10.3 per cent last year, while in Qatar wages rose by 10.6 per cent, marginally lower than last year’s figure of 11.1 per cent.

Across the GCC, sectors enjoying the highest pay rise were construction, banking and energy – consistent with the last two years’ results and reflecting the sectors’ continued strong growth. Health care and education registered the lowest increases.

Among job categories, engineers and finance staff received the biggest pay rises, followed by HR professionals in third place. Historically under-represented in the region, the HR function has recently been catapulted to the front line as Gulf-based employers grapple with the challenge of attracting, developing and retaining staff.

Key drivers

The study found intense competition for talent, spiralling living costs and a strong public sector all contributed to the high salary increases.

The tumbling United States dollar has been diminishing the value of Gulf compensation packages pegged to the U.S. dollar for European expatriates, putting pressure on these companies to increase salaries.

Economic impact of staff shortages

Several executives interviewed by complained that, while market demand was extremely healthy, skills shortages were limiting their companies’ ability to grow, forcing them to turn down new business or, in some cases, causing them to miss targets on their existing projects. The study warned that, if continued, this could limit overall growth in the non-oil sector of the economy, hampering the region’s plans to diversify away from oil.’s research also found that smaller, less well-established companies faced the greatest pressure, often unable to compete with pay packages offered by larger firms. The long-term impact for the market could be to impede growth of start-up companies, lead to smaller companies merging with larger enterprises and discourage new entrepreneurial ventures.

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