Employment and Salary Trends in the Gulf 2010-2011
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Employment&SalaryTrendsintheGulf
ExecutiveSummary FormanybusinessesandresidentsintheGulf,2010beganwithacloudofuncertainty.Havinglived throughyearsofbreakneckgrowththatcametoasuddenmassivehaltinlate2008,andhaving watchedagainasrisinghopesofrecoveryseemedtoevaporatealmostovernightwithDubaiWorlds shockannouncementinlate2009,fewdaredtoanticipatewhatmightcomenext. Asitturnedout,2010provedarelativelypeacefulyear,withthebusinessandemploymentmarket seeinganumberofimportanttrends,butnomajortsunamisofthescaleseenovertheprevioustwo years. ThispublicationsummarizesthemainfindingsofGulfTalent.comsresearchonemploymentand salarytrendsintheregion,itssixthannualstudy.Drawingonfindingsfromasurveyof32,000 professionalsand1,400companiesintheGulf,itcapturesthemaintrendsinrecruitment,salaries andemploymentlegislation,andattemptstoshedlightonwhattheregionsemploymentmarketis likelytowitnessin2011. RecruitmentandMobility During2010,QatarandSaudiArabiawerethebiggestcontributorstojobcreationintheGulf,thanks totheirlargehydrocarbonrevenues,accumulatedreservesandmassivegovernmentspendingon infrastructureprojects.TheEmirateofAbuDhabialsosawemploymentgrowth,thoughlessthanin thepreviousyear. Dubai,KuwaitandBahrainsawlowerratesofgrowth.Asaresult,theregionwitnessedanotheryear ofstrongmobilitycurrentswithSaudiArabia,QatarandAbuDhabicontinuingtoabsorb professionalsfromslowergrowingpartsoftheregion,particularlyDubai. ThetinygasrichstateofQatarcontinueditsascentinthepopularityrankswithfastrisingsalaries, growingemploymentopportunitiesandhigherinternationalprominence,whichcametoagrand finalewithitssurprisequalificationtohostthe2022FootballWorldCup. Amongsectors,healthcareandretailsawthebiggeststaffexpansionswhilehospitalityhadtheleast growth. Meanwhile,thegradualshiftinthedemographicmixoftheregionslabourforceappearstobe gainingmomentumwithemployerstargetingamuchwiderpooloftalentglobally,including professionalsfromAfrica,SouthAmericaandtheFarEast.
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Employment&SalaryTrendsintheGulf
Inparticular,theemployeepoolacrosstheregioniswitnessingasmallbutfastrisingChinese presencedrivenbytheincreasingdifficultiesofhiringfromtraditionalsourcesofIndiaandthe Philippines,aswellasthegrowingfootprintofChinesecompaniesintheregion. SalariesandCostofLiving Salary Increase by Country BasedonGulfTalent.comssurveyofprofessionals % workingintheGCC,salariesintheregionincreasedatan 2009 2010 averagerateof6.1%during2010,comparedwith6.2%in 6.8% 6.8% Qatar 2009and11.4%in2008.QatarandSaudiArabiaenjoyed 6.5% Saudi Arabia 6.7% aboveaverageincreases,giventheirmorebuoyantjob 6.4% 8.4% Oman markets.TheUAEandBahrainhadthelowestrises. 4.8% 5.7% Kuwait Amongsectors,Retailledtheincrease,with6.4%,while 5.5% 5.2% UAE Educationhadthelowestincreaseatjust3.8%.Among 6.7% 4.9% Bahrain jobcategories,humanresourceprofessionalsenjoyedby Source: GulfTalent.com Surveys farthehighestincreasesat7.1%withtheHRfunction risinginprominenceascompaniesshifttheirfocusfromjobcutstodrivingperformance.Lawyers hadthelowestaverageincreaseat4.3%. Amongnationalities,AsianandArabexpatriatesenjoyedhigherpayrisesmainlydrivenby economicgrowthandlargesalaryincreasesintheirowndomesticmarkets.Westernprofessionals receivedmuchlowerraises,givensluggishgrowthandhighunemploymentintheirhomecountries. Inabsoluteterms,Westernsalariesstillremainwellabovethoseofotherexpatriates,butthegapis narrowing. InflationwasmodestornegativeacrossmostoftheGCC,particularlyinDubaiandDohawhichhave seenrentsplummetfromtheir2008peaks.Asaresult,forthesecondyearrunning,salaryincreases actuallyexceededtheincreaseincostofliving,allowingmanyprofessionalstoimprovetheir standardofliving. Meanwhile,withfastgrowingpopulationsandrisingconsumption,GCCgovernmentsarelookingfor waystoreducetheirspirallingburdenofsubsidiesonfoodandutilities.TheUAEandQatarhave increasedfuelprices,whileSaudiArabiaisphasingoutitsheavilysubsidiseddomesticwheat production. EmploymentLegislation Legislativechangesin2010continuedtofollowtwobroadobjectivesincreasingtheshareof employmentopportunitiesdedicatedtoGulfcitizens,andimprovingtherightsandprotectionsof expatriateemployees.
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Employment&SalaryTrendsintheGulf
Allstatescontinuedtoraisethebaronnationalisation.Inanewinitiative,theUAEannouncedatier basedsystemoftargets,withfinancialincentivesandpenaltiesdesignedtoencouragefirmsto achievehigherlevelsofworkforcenationalisation. GCCgovernmentsarealsosteppingupeffortstodiversifythedemographicsoftheirexpatriate workforce,largelytoaddressconcernsovernationalidentity.Thisisfurtherputtingpressureon employers,whonowfaceacaponthemaximumproportionoftheirstaffthatcanbesourcedfrom anyonenationality.Itisalsolimitingthecareeroptionsofexpatriatesfromcountrieswiththe largestrepresentationintheGCC,astheyfindsomeemployersunabletohirethemduetohaving reachedtheircaps. Gulfstatesarealsotakingmeasurestoincreaseprotectionsforexpatriateemployees.TheUAEnow requirescompaniestopayemployeewagesthroughacentralauthority,radicallyreducingthe commonpracticeoflatepaymentornonpaymentofwages.Meanwhile,Kuwaithasstarted implementationofanewlabourlawthatoffersexpatriatesgreaterentitlementtoleavesandother benefits. Meanwhile,sourcecountriessuchasIndiaandthePhilippineshavebeensteppinguptheirown measurestoprotecttherightsoftheircitizenswhocometoworkintheGulf,particularlytryingto enforceaminimumwage. 2011Forecast TheGulfsemploymentmarketisexpectedtoremainstableduring2011,withnetjobcreation continuingatamoderatepaceandsalariesforecasttogrowatanaveragerateofaround7percent. Economicrecoveryworldwideandrisingoilpricesshouldhelpacceleratebusinessandemployment demandintheGCC.Meanwhile,inflationisthreateningtoreturntotheregionwiththemassiverise inglobalfoodprices,andrentincreasesinpartsoftheregion. TherisksofconflictandpoliticalturmoilinthewiderMiddleEastregionappearhigherthanin previousyears.AnysustainedupheavalswillhavemixedconsequencesforGulfbasedemployers potentiallyincreasingthesupplyofArabprofessionalsfromregionalhotspotswhowillseekcareer opportunitiesintheGulfandputtingdownwardpressureonsalaries,whiletheresultingcoverageof theregionininternationalmediamaydetersomeWesternprofessionalsfrommovingtotheregion. Atthesametime,governmentpressureontheprivatesectortocreatejobsforunemployed nationalsislikelytoincreasefurther,withemployersfacingeventoughernationalisationtargets. GulfTalent.com February2011
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Employment&SalaryTrendsintheGulf
TableofContentsStateoftheEconomy...............................................................................................................................5 RecruitmentandMobility ........................................................................................................................6 . CostofLiving...........................................................................................................................................10 Salaries ...................................................................................................................................................12 . NationalisationandGovernmentPolicy.................................................................................................16 LegislationandEmployeeRights............................................................................................................18 GlobalEmployment................................................................................................................................20 2011Forecast.........................................................................................................................................22 AppendixUsefulStatistics...................................................................................................................26 Methodology..........................................................................................................................................27 AboutGulfTalent.com............................................................................................................................28
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Employment&SalaryTrendsintheGulf
StateoftheEconomy Havingsufferedabatteringin2009afteryearsofrunawaygrowth,manybusinessesacrossthe regionstarted2010longingforthegreenshootsofrecovery.Theircautiousoptimismwasmutedby therealityofachallengingbusinessenvironment,particularlyincollectingcustomerpayments,as wellasbroaderconcernsaboutthefalloutfromtheshockannouncementinNovember2009by DubaiWorld,theinvestmentarmoftheDubaigovernment. Thepriceofcrudeoil,thekeyengineoftheregionaleconomy,remainedthroughouttheyearatwell belowitspeakvalue.Governmentinitiatives,whichhadsuccessfullyhelpedmaintaintheeconomy intheimmediateaftermathofthecrisis,werebroadlycontinued.SaudiArabiasawanotheryearof increasedgovernmentinvestmentinthehealthandeducationsectors,aswellaslargeinfrastructure projectssuchasthenewrailwaysystem,whileamajorexpansionofMuscatairportprovidedmuch oftheimpetusforgrowthinOman. Atthesametime,someinitiativeswerescaledbackfromtheiroriginalgrandvisions,astheloweroil priceproveddurableandsomeGCCgovernmentsbegantofacerecorddeficits. Crude Oil PriceUSD per Barrel 2010 Estimate150
GCC Economic Growth200914.0%
Qatar Oman100 4.1%
9.5% 3.0% 3.1% 0.6% -4.6% -2.7%
Bahrain Saudi Arabia Kuwait0 2008 2009 2010 2011
4.1%
50
3.8%
3.4%
UAE
2.1%
Source: Dow Jones & Company
Source: Economist Intelligence Unit
Givenitsgreaterrelianceoncreditfinancingandhigherexposuretointernationalmarkets,Dubai remainedtheregionsmostsubduedeconomy,followedbyKuwait.SaudiArabia,Qatar,Omanand AbuDhabi,ontheotherhand,remainedrelativelybuoyant.Allmarketsdidsignificantlybetterthan in2009,thoughthiswasnotalwaysfeltequallybyallsectorsoftheeconomyasmuchofthe growthwasconcentratedinafewsectorsreceivingthebulkofstimulusspendingbygovernments.
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Employment&SalaryTrendsintheGulf
RecruitmentandMobility Whilethemassredundanciesthatoccurredintheimmediateaftermathofthecrisiswerenot witnessedtothesamedegreein2010,manycompaniesdidhavetomakepainfulcuts.Inparticular, somewhohadearlierresistedthepressuretodownsizeinanticipationofanimminentrecovery finallydecidedthattheycouldnotwaitanylongerandhadtoletsomeemployeesgoinorderto survive. Otherscontinuedtousetheopportunitytoupgradetheirstaff,oftenatlowerpay,particularlyin sectorssuchasconstructionwhichhadseenalargesupplyofqualitytalentreleasedintothemarket. Employment by SectorNet % of firms which increased headcount in 2010 Healthcare Retail & FMCG Telecom & IT Banking Oil & Gas Logistics Construction Hospitality5% 36% 35% 30% 27% 80% 59%
Employment by CountryNet % of firms which increased headcount in 2010
Oman Saudi Arabia
57%
55%
Qatar Kuwait Bahrain
45%
25%
23%
25%
UAE
22%
TheSearchforQuality Whileconstructionfirmsfounditmucheasiertosourcetalentlocallyandglobally,manyother companiesinterviewedbyGulfTalent.comcomplainedthat,despitemorecandidatesbeingavailable inthemarket,itwasstillhardtofindgoodquality. Withthemarketuncertain,highperformingprofessionalscontinuetobewearyofacareermove thatmayexposethemtolastin,firstoutdownsizingpolicies.Atthesametime,agreaternumber ofweakercandidateshaveenteredthejobmarket,eitherfollowingterminationorfearingthe possibilitythereof,makingitevenmoredifficulttoidentifythestrongcandidates. Meanwhile,downsizedandoperatingatcapacity,manycompanieshavemadestaffretentionatop humanresourcepriorityastheyfindthemselveswithoutanymarginforstaffdepartures.Thishas madeitmoredifficultforcompetitorstopoachtheirstaff.
Source: GulfTalent.com Survey of HR Managers
Source: GulfTalent.com Survey of HR Managers
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Employment&SalaryTrendsintheGulf
Yetanotherfactorcontributingtotherecruiting challengeappearstobegreaterexpectationsof quality,followingthecrisis.Employersarekeento Itssohardtofindtopquality avoidarepetitionofrecklessrecruitmentdrives candidatesNobodyislettinggoof seenduringtheboomyears.Manyreportedhaving theirtopperformers. revampedtheirrecruitingprocessestomakethem muchmorestringentincludingadding RecruitmentManager psychometrictestingandbackgroundchecksonall LeadingTelecomGroup, UAE potentialnewhires.Recruitmentagencies increasinglycomplainofmuchhigherexpectations ofemployersandlongerdecisioncycles. MobilityTrends TheshiftinthecentreofgravityfromDubaitootherpartsoftheregioncontinuedduring2010, albeitatamoremoderatepace.Companieswithlocationsacrosstheregionmovedexcessstaff fromDubaitoAbuDhabi,Qatar,andSaudiArabia,whilesomecandidatesmadethemovedirectly byswitchingtoemployersinthosecountries. Key Mobility Trends in the Gulf*2008-2010
Abu Dhabi Abu Dhabi
Dubai Dubai
Qatar Qatar
Saudi Arabia Saudi Arabia * Includes internal movements within companies Source: GulfTalent.com Survey
OneofthemostdramaticchangesfollowingthecrisishasbeentheshiftingstatusofDubaifroma destinationforprofessionalstoasourceoftalentforemployerselsewhere.Basedon GulfTalent.comssurvey,anestimated5%ofDubaisresidentsnowcommutedailytotheirjobsin AbuDhabi,upfrom1%twoyearsearlier.Atthesametime,withDubairentsfallingtomuchmore affordablelevels,commutingfromneighbouringSharjahhasbecomelesscommon.
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Employment&SalaryTrendsintheGulf
Dubai employees living in SharjahAs % of all professionals working in Dubai22%
Dubai-residents working in Abu DhabiAs % of all working professionals living in Dubai
5.4% 20% 3.4% 18%
16%
1.1%
1.1%
2007
2008
2009
2010
2007
2008
2009
2010
Inasimilardevelopment,2%ofBahrainresidentsnowcommutedailyacrossthebordertoSaudi ArabiasEasternprovince,thehometothecountrysoilandpetrochemicalindustries.Thesharp increasecomesbothfromexistingresidentsswitchingtojobsinKSA,aswellasexpatriatesfrom otherpartsoftheGulftakingupjobsinSaudiArabia,butchoosingtostationtheirfamiliesin neighbouringBahrain,duetolifestyleconsiderations. Bahrain-residents working in Saudi ArabiaAs % of all working professionals living in Bahrain
Source: GulfTalent.com Surveys
Source: GulfTalent.com Surveys
2.2%
1.0%
1.1% 0.9%
2007
2008
2009
2010
QatarversusDubai Theregionschangingdynamiciswellcapturedincandidatesstatedcareerplans.GulfTalent.coms surveyofmobilityintentionsfoundthat,whiletheUAEremainsthemostattractivedestinationfor professionals,Qatarisclosinginfastand,basedoncurrenttrajectory,couldwellovertaketheUAEin 2011astheGulfsmostpopulardestinationforexpatriates(seenextchart).Keydriversofthishave beenafastgrowingeconomyandanabundanceofemploymentopportunities,highersalarieson offer,fallingcostofliving,aswellasthegovernmentscontinuedinvestmentindevelopingitsbrand internationallymostrecentlywithitssuccessfulbidtohostthe2022FootballWorldCup. Whenitcomestotheretentionofitsresidents,however,QatarrankswellbelowtheUAE.Thisis partlyduetolawspreventingexpatriatesfromchangingemployers,butalsobecausethecountrys infrastructuredoesnotyetmatchthebrandprojectedexternallyandremainsfarbehindwhatis availableintheUAE,particularlyDubai. 8
Source: GulfTalent.com Surveys
Employment&SalaryTrendsintheGulf
Attraction of Expatriates% of GCC-based expats outside the country who wish to relocate into it70%
Retention of Expatriates% of expats within the country who wish to remain there 2010
UAE60% 50%
72%
UAE Qatar
Kuwait Qatar
59%
40% 30%
51%
Bahrain20% 10%
50%
Saudi Arabia Bahrain Oman Kuwait2009 2010
Oman
50%
0% 2008
Saudi Arabia
50%
Givenitssafehavenstatusandpotentialforhighsavingrates,SaudiArabiahasseenaboostin popularitysincetheonsetofthefinancialcrisis,withemployersabletoattractalargenumberof expatriatesfromother,moretroubledpartsoftheregion.However,theKingdomremainsindanger oflosingthispooloftalentassoonasthereisamarketpickupinthemorepopulardestinations.
Source: GulfTalent.com Surveys
Source: GulfTalent.com Surveys
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Employment&SalaryTrendsintheGulf
CostofLiving Forasecondyearrunning,Gulfcountriesexperienced Inflation %, 2010 Estimate inflationarytrendsquitedifferenttotheirhistorical norms.TheUAEandQatar,whichnotlongagowere 5.4% Saudi Arabia experiencingdoubledigitinflation,sawzeroornegative inflationin2010drivenmainlybyfallingrents,as 4.0% Oman massivenewsuppliesofhousingcameontothemarket. 3.9% Kuwait BycontrastSaudiArabia,whichuntil2006enjoyed 2.5% Bahrain almostzeroinflationthankstogenerousstatesubsidies, thisyearsawtheregionshighestrateofinflationat 1.6% UAE 5.4%. -1.9% Qatar WhilerentsandtheUSdollarexchangerate,twokey Source: Economist Intelligence Unit driversofregionalinflationinrecentyears,remained relativelystableduring2010,risingglobalfoodpricesinthesecondhalfoftheyearbegantoput pressureonlocalprices.Thishasbeencompoundedbyagradualreductionofstatesubsidieson food,fuelandutilities. StateSubsidies Withfastgrowingpopulations,governmentspendingonsubsidieshasballoonedinrecentyears, forcingGulfstatestolookforwaystoscalebackthisspending.In2009,subsidiesonelectricityalone accountedforareported9%oftheSaudigovernmentsexpenditure,withadditionalsubsidieson waterandbasicfoodcommodities.TheSaudigovernmentisundertakinganumberofmeasuresto reduceitsburdenofsubsidies,suchasreducingdomesticwheatproductionwhichrequiresheavily subsidizedwaterproducedfromdesalinationplants. Meanwhile,theUAEsawtheretailpriceoffuelincreasethreetimesduring2010.Similarly,Qatar announceda25percentincreaseinfuelprices.KuwaitappearstobetheonlyGulfstatemaintaining andevenincreasingtheinflationarycushion,withmostaiddirectedspecificallytoKuwaiticitizensin theformofhandouts. Thereformofthesubsidiesregimeisexpectedtocontinue,thoughitmaybescaleddowninsome GulfstatesinthelightofrecentpopularunrestinsomeMiddleEasterncountries,whicharewidely believedtohavebeenpartlytriggeredbyrisingprices.
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Employment&SalaryTrendsintheGulf
RegionalCostComparison Despitelowerratesofinflationoverthelasttwoyears,theUAEandQatarremain,inabsolute terms,themostexpensivecountriesintheregion,withresidentialrentsstillmuchhigherthanthose foundelsewhereintheGulf.Subsidiesonfood,fuelandutilitiesarealsomorelimited,makingthem moreexpensivetothepublicthaninmostotherGulfstates. AfulltankofpetrolcostsaroundUSD28intheUAE,comparedtojustUSD9inSaudiArabia thougheventheUAEpriceremainssignificantlylowerthanprevailingratesinIndiaortheUK,where thecostisUSD81andUSD124respectively. Overall,AbuDhabiisthemostexpensivecityintheregion,mainlyduetoitshighresidentialrents, whichhavenotyetseenthekindofcorrectionobservedinDubaiandDohafollowingthedownturn. Rent for Two-bedroom ApartmentUS$ per month, 2010* Abu Dhabi Dubai Doha Sharjah Muscat Manama Kuwait Khobar Riyadh Jeddah Dammam1,020 990 950 900 800 710 580 560 1,820 1,790 2,270
Fuel Cost ComparisonUSD per full tank of petrol, January 2011*
UAE
28
Oman
24
Kuwait
15
Qatar
14
Bahrain9
13
Saudi Arabia
* Average figure. Wide variations based on location and quality Source: GulfTalent.com Survey
* Assuming tank capacity of 60 litres, standard 95-octane gasoline. Source: Press articles, GulfTalent.com Analysis
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Employment&SalaryTrendsintheGulf
Salaries Salariesincreasedatanaveragerateof6.1%acrosstheGCCduring2010,similartotheprevious yearslevelof6.2%butmuchlowerthanthe11.4%levelseenin2008. GCC Average Salary Increase%, 2005-201111.4%
Salary Increase by Country% 2010 Qatar6.8% 6.7% 6.4% 5.7% 5.2% 4.9%
20096.8% 6.5% 8.4% 4.8% 5.5% 6.7%
9.0% 7.9% 7.0% 6.2% 6.1% 6.6%
Saudi Arabia Oman Kuwait UAE
2005
2006
2007
2008
2009
2010
2011
Bahrain
Forecast
Qatar,whichholdstheworldsthirdlargestgasreserves,sawtheregionshighestaveragepay increaseat6.8%,givenitsfastgrowinghydrocarboneconomy,massivegovernmentspendingon infrastructure,andcontinuedneedtoattractandretainprofessionals. SaudiArabiaandOman,bothenjoyingreasonableeconomicgrowthlargelyonthebackofheavy governmentspending,experiencedsimilarincreasesat6.7%and6.4%respectively. Kuwait,theUAEandBahrain,whichwereworsehitbytheglobalfinancialcrisis,sawlowerlevelsof payincrease. WithintheUAE,averagepayrisesstoodat5.5%inAbuDhabicomparedto5.1%inDubai,reflecting greatersupplyofprofessionalsandlowerresidentialrentsinDubai. Real Salary Increase by Country% Salary increase net of inflation, 2010 Salary Rise Qatar UAE Oman Bahrain Kuwait Saudi Arabia2.4% 2.4% 1.8% 1.3% 3.6% 8.7%
Source: GulfTalent.com Surveys
Source: GulfTalent.com Surveys
Inflation-1.9% 1.6% 4.0% 2.5% 3.9% 5.4%
6.8% 5.2% 6.4% 4.9% 5.7% 6.7%
Source: GulfTalent.com Survey, Economist Intelligence Unit
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Employment&SalaryTrendsintheGulf
AlthoughtheUAEhashadoneofthelowestnominalsalaryincreasesintheregionin2010,residents therehaveactuallyenjoyedoneofthehighestaveragepayrisesinrealtermsi.e.salaryincrease netofinflation.Bycontrast,realsalaryincreasesinSaudiArabiaweretheregionslowest,as inflationwasthehighestintheregion. Thefactthatpayrisesappeartobesoinsulatedfromtheunderlyingincreaseincostoflivingis perhapslargelyduetotheexpatriatenatureoftheGulfsprivatesectorworkforceandthedominant influenceofglobalfactors,particularlyrisingsalariesinIndia. SectorsandJobCategories Amongsectors,retailsawthebiggestincreaseat6.4%,drivenbyageneralriseinconsumer spendingandstrongdemandfromtheboomingSaudimarket.Educationandhospitalitysawthe lowestincreasesat3.8%and4.8%respectively. Intermsofjobcategories,humanresourcessawthehighestaveragepayincreaseat7.1%insharp contrasttothepreviousyearwhenHRprofessionalsfacedheavyjobcutsandthelowestpayrises. Withcompaniesdownsizedandmuchmorefocusedonperformancethanbefore,theHRfunction hastakenonarenewedsignificance.ManyHRprofessionalsinterviewedbyGulfTalent.com reportedbeingmuchmoreinvolvedwiththebusinessaswellasbeingmeasuredagainstmuchmore stringenttargets.Lawyersreportedthelowestaverageriseat4.3%.
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Employment&SalaryTrendsintheGulf
Salary Rise by Sector%, 2010
Salary Increase by Job Category%, 2010
Retail & FMCG Transport & Logistics Construction Oil & Gas Healthcare Telecom & IT Banking Travel & Hospitality Education3.8%
6.4%
HR Sales Engineering
7.1%
6.4%
6.3%
6.4%
6.2% 6.0%
6.3%
Finance6.0%
Marketing5.7% 5.3%
5.5%
Admin IT Law4.4%
5.1%
4.8%
4.3%
NationalityDifferences Onanationalitybasis,ArabandAsianexpatriatesenjoyedthehighestaveragepayrises,while Westernexpatriatesreceivedthelowest.Thetrend,whichlargelyreflectstheprevailingsalary increasesineachgroupsdomesticmarket,ishelpingnarrowthenationalitygapinsalarieswhich hasexistedintheGulfforseveralyears. Salary Increase by Nationality%, 2010
Source: GulfTalent.com Survey
Source: GulfTalent.com Survey
Arab Non-GCC Asian
6.5%
6.1%
Arab GCC
5.3%
Western
3.2%
WithhighunemploymentinWesterncountries,manyGulfemployersreportedfindingiteasierand moreaffordabletoattractWesternprofessionals.RecruitmentofAsianexpatriates,incontrast, continuestobeevermorechallenging,giventhefastpaceofgrowth,risingsalariesandincreasingly interestingcareeropportunitiesavailableintheirdomesticmarkets.
Source: GulfTalent.com Survey
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Employment&SalaryTrendsintheGulf
Despitelowerthanaveragepayincreasesoverthelastseveralyears,salariesofWestern professionalsremaininabsolutetermsthehighestamongallnationalitygroupsworkingintheGulf. PayforGulfnationalsranksinsecondplace,withtheexceptionofentrylevelpositionswherethey maycommandapremiumrelativetoallothergroups.ExpatriatesfromArabicspeakingcountries arenext,followedbyAsianprofessionals. Salary Level by NationalityMid-level management* USD per month, 2010 UAE Saudi Arabia
Western Emirati Arab Expats Asian5,100 7,100
9,400
Western Saudi Arab Expats Asian5,200
9,600
4,100
3,800
2,900
* Based on total guaranteed pay, including allowance, excluding bonus and commission. Figures represent market median; wide variations by job category, company and experience level Source: GulfTalent.com Survey
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Employment&SalaryTrendsintheGulf
NationalisationandGovernmentPolicy Giventheyoungpopulationandlargenumbersof graduatesenteringthejobmarketeachyear, creatingemploymentfornationalscontinuestobe Omanisation isamajorissue.The atoppriorityacrosstheGCC.Withthepublicsector quotasarehinderingthegrowthof unabletoabsorballtheavailablepool,government ourbusiness. pressurecontinuestoincreaseontheprivatesector GeneralManager tomakeupforthedeficitbyreplacingtheir LeadingConglomerate, Oman expatriateemployeeswithnationals. SaudiArabia,BahrainandOmanhavelongimposedstrictworkforcenationalisationtargetsontheir companies,withnoncompliantfirmsoftenfindingthemselvesunabletoreceiveworkpermitsfor theirexpatriateemployees.Governmentshavealsoprovidedarangeofincentives,suchas subsidizingsalariesforfirmsthatwerewillingtogivejobstounemployednationals,whilealso investingintheeducationsystemtoimprovetheskillsofnationalsforthejobmarket. Kuwaitstartedamuchtoughernationalisationregimein2009,withtheimpositionofveryambitious targetsonthebankingsector.Meanwhile,Bahrainabandonedlongawaitedplanstoremove nationalisationtargetsandreplacethemwithataxoncorporationsforhiringexpatriates.Following widespreadconsultationsandoppositionfromsomeemployers,mainlyinlabourintensivesectors, theproposedtaxwaseventuallysetsolowastohavenodeterringeffect,hencerequiring nationalisationquotastoremaininplace. TheUAEModel Theregionslatestnationalisationinitiativehas comefromtheUAE.Historicallythegovernmenthas imposeddifferenttargetsforeachsector,with Thegovernmentisgoingtoaccept bankstypicallyfacingthehighesttargets.Inan that15%Emiratisation inour attempttointroducemarketforcesintothe industryisjustnotpossible.Ifthey nationalisationdrive,thegovernmenthas dont,wewilljusthirethemonour announcedatiersystemforallfirmsregardlessof payroll.Itwouldbeahugecostfor activity.Underthenewrules,inadditiontosetting us. toughminimumlevelsofEmiratisation,companies HRDirector MultinationalEngineering Group,UAE achievinghighernationalisationlevelswillbe rewardedbypayinglowerfeestoprocessvisasfor theirexpatriateemployees. Someanalystsbelievethat,whileenforcementofnationalisationtargetsbygovernmentsishelping createjobsforGulfcitizens,alongtermsolutionmayneedtoincludefurtherreformsofthe
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Employment&SalaryTrendsintheGulf
educationsystem,andpossiblyareductionofgenerouspackagesinthepublicsector,particularlyat entrylevel,whichareverydifficultfortheprivatesectortocompetewith. DemographicDiversification EmployersacrosstheGulfarecomingunder increasingpressure,notonlytolimittheproportion ofexpatriatesintheirworkforce,butalsoto ThechallengewefaceinSaudisation diversifythemintermsofnationalityandtoavoid isnothingcomparedtohavingto havingonedominantnationalitygroup. findcandidatesfromnationalities allocatedtous.Wehavenochoice SaudiArabiahashadaverystrictworkforce buttouseoutsourcing companies diversificationpolicyforsometime,withemployers intheKingdomgivenvisaslotsforspecific CEO InvestmentGroup, SaudiArabia nationalitieswellbeforetheyhavebegunsoliciting candidates.Thepolicyisbeingincreasinglyenforced. TheUAEhasrecentlyannouncedsimilarmeasures,withcompaniesthathavetoomanyemployees fromaparticularnationalityfindingadditionalvisashardtogetorbeingchargedhigherfees,until theyhaveredressedtheirnationalityimbalance. Thedrivefordiversificationappearstopursuetwoobjectives.Atthenationallevel,itaimsto preservethecountrysnationalidentitybymakingitscitizensthelargestsinglenationalitygroup.At thesectorlevel,itisintendedtopreventaparticularfieldorprofessionfrombeingdominatedby onenationalityashashappenedinsomeareas. InSaudiArabia,wherethepolicyhasbeenenforced forsometime,companiesincreasinglyusestaff outsourcingprovidersinanefforttobypassthe Ihavebeentoldbymyemployerthat restrictionsanddeploythetalenttheyneed, Imaybeaskedtoleave,asthe irrespectiveofnationality. companyhastoomanyBritish nationalsandneedstomeetthe20% Iffullyenforcedacrosstheregion,workforce maximumlimitforeachnationality. diversificationpoliciesarelikelytohavea transformationalimpactonsectorswithhigh Britishprofessional, nationalityconcentrations,forcingthemtotarget UAE newcountriesforrecruitmentortohirefromother industriesandinvestinfurthertraining. Meanwhile,professionalsfromcountrieswiththehighestrepresentationintheGulfworkforce includingIndia,thePhilippinesandEgyptmayfindtheircareeroptionssomewhatlimited,asmany prospectiveemployerswouldalreadybeabovetheirlegallimitsandunabletohirethem.
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Employment&SalaryTrendsintheGulf
LegislationandEmployeeRights FreeMovementofLabour OneoftheprimefeaturesoftheGulfsemploymentmarkethasbeentheabilityofcompaniesto legallypreventtheirexpatriateemployeesfromswitchingtootherfirmsinthesamecountry(theso calledNoObjectionCertificateorNOCrequirement). Inrecentyears,someGCCcountrieshaveliberalizedtheirlabourmarketbyremovingtheNOC requirementmostnotablyBahrainandOman.Theremovaloftheserestrictionsduring20072008 ledtoawaveofpayrisesforexpatriatestaff,ascompanieshadtoworkhardertoretainthem. Kuwaithashistoricallyallowedonlycertaingroupsofprofessionalstoswitchjobswithouttheir employerspermission.Afteryearsofdeliberation,anewlabourlawwasfinallyenactedin2010 whichshiftsthesponsorrolefromtheemployertoapublicauthorityandtherebyallowscompletely freemovementtoallexpatriates.MostemployersinterviewedbyGulfTalent.comdidnotbelievethe policywillactuallybeimplementedwithin2011. TheUAEenforcesthejobswitchingrules,subjecttoalargenumberofexceptions,includingfree zones.Thelistofexceptionshasbeenexpandedfurtherin2010. Qatarhasbyfartheregionsmoststrictbarriersagainstjobswitchingand,despiteoccasional rumoursthattheymayberelaxed,therehasbeennosignofitsofar.Qatarbasedprofessionals lookingtochangejobsthereforefindthattheyhavenochoicebuttorelocatetoothercountries.For employers,thepolicyisamixedblessingprovidingastrongretentiontool,butmakingit impossibletofillvacanciesfromthetalentpoolavailablewithinthecountry. WageProtection Inamajorinitiative,theUAEstartedimplementinga WageProtectionSystem(WPS).Underthisscheme, WPSisworkingwellforus.Thereis allemployers(withtheexceptionoffreezones)are clearproofthatstaffwerepaidon obligedtopaytheirstaffwagesthroughacentral timeandwehavenomore serviceoperatedbythegovernment. inspectionsordisputes. Despiteearlylogisticalissuesandsomepainful HRManager adjustmentsrequiredfromcompanies,thescheme ConstructionGroup, UAE nowseemstobeoperatingsmoothly.Thestated goalhasbeentoprotectworkersagainstlate paymentornonpaymentofwagesanditappears
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Employment&SalaryTrendsintheGulf
tohavelargelyachievedthisobjective.Someemployersevenreportedcuttingstaffheadcountto ensuretheycouldmeettheregularmonthlypaymentsrequiredunderthescheme. Aresidualbenefitofthesystemhasbeentoprovidethegovernmentwithmuchgreater transparencyonthelabourmarket,includingactualsalariesbeingpaideachmonth.And furthermore,shouldthecountrywishtointroduceincometaxatsomepointinthefuture,the existenceofthissystemwillprovideanidealbackboneforitsimplementation. SourceCountryProtection AfteryearsofunsuccessfullylobbyingtheGCCgovernmentstosetauniversalminimumwage, governmentsofseveralAsiancountrieshaveinrecentyearsdecidedtoimposetheirownminimum wageleveloncompanieswhowishtoemploytheircitizens.Amongthesearethegovernmentsof India,thePhilippines,NepalandSriLanka,withothersstudyingsimilarmoves. GiventhelackofanenforcementmechanismwithintheGulf,therulingsarebeingenforcedduring therecruitmentprocess,withthegovernmentofthesourcecountrynotissuingthenecessaryexit documentsforapotentialemployeeuntiltheyhavereceivedacopyoftheemploymentcontract andverifiedtherequirementsaremet. Withenforcementofthepolicyincreasing,someemployersintheGulfarefindingrecruitmentfrom Asia,particularlythePhilippines,moreexpensiveaswellasmorebureaucratic.Althoughthisonly impactsthelowestpaidpositionsdirectly,itcouldputpressureonsalariesfurtheruptheranks,as companiesseektomaintainpaydifferentials.
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Employment&SalaryTrendsintheGulf
GlobalEmployment WithexpatriatescomprisingoverhalfoftheworkforceintheGulf,andover90percentofthe privatesectorincountriessuchasQatarandtheUAE,theregionisdirectlyimpactedbytrendsin thelabourmarketglobally. Byfarthebiggestdevelopmentisthecontinued challengeofhiringfromIndia,theGulfslargest sourceofexpatriateworkers.Withthecountry Itisgettingmoredifficulttohire enjoyingrapideconomicgrowth,increasing qualitycandidatesfromIndiaThey multinationalpresence,expandingemployment cannowworkforinternational opportunitiesanddoubledigitpayrises,persuading brands,dothesamejob,atavery Indianprofessionalsespeciallytopperformersto competitivesalaryintheirhome movetotheGulfhasbecomeextremelydifficult. country. CEO LeadingRetailGroup, Kuwait EmployersreportthatIndiancandidatesare demandinghighersalariesandacceptingfewer offers.Meanwhile,manyIndiansalreadyintheGulf continuetoleaveforbetteropportunitiesbackhome.RecruitmentfromthePhilippineshasalso becomemorechallenging,althoughnottothesamedegree. Bycontrast,withhighunemploymentandstagnantwagesinEuropeandNorthAmerica,employers arefindingitmucheasiertohireWesternnationals. Unemployment Rate2008-201011% 10% 9%
Global Salary Increases%, 2010 India France Philippines Canada GCC UK Australia Australia UK US Canada3.8% 6.4% 11.1%
8% 7% 6% 5% 4% 3% Jan-08
6.1%
2.5%
2.4%
2.4%
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Source: Economist Intelligence Unit
Source: Aon Hewitt, Hay Group, GulfTalent.com
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Employment&SalaryTrendsintheGulf
TofillthevoidleftbyIndiancandidates,companiesareseekingalternativesourcesoftalentacross Asia,AfricaandSouthAmerica.Inmostcases,however,theyfindthateithertheskillbaseisnot adequateorsalaryexpectationsexceedthelevelsonofferintheGulf. TheriseofChina Ofparticularinteresthasbeengrowingattemptsby GulfemployerstotapintoChinaslargetalentpool. Sofar,themainchallengehasbeenEnglishlanguage WearehiringChinesenursesinstead skills,althoughthisseemstobesomewhat ofFilipinos.Itisbecomingmore diminishing.TheyoungerChinesegenerationspeak difficulttohireFilipinosasthereis betterEnglishandemployersareincreasingly moredemandforthemglobally learningtoadapttheirtrainingprogrammesto addressthisneed. HRConsultant MedicalGroup SaudiArabia Meanwhile,majorChinesecorporationshave becomeincreasinglyactiveintheGulf,havingwon severallargeconstructioncontractsrecentlyandset upjointventureswiththeregionsleadingoilandgascompanies.Withmanyofthesecontracts beingexecutedlargelybystaffbroughtindirectlyfromChina,thisisfurtherincreasingthe representationofChineseworkersintheGulf,potentiallychangingthedemographicmixofthe regionoverthecomingyears.
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Employment&SalaryTrendsintheGulf
2011Forecast EconomicGrowth Intheshortterm,theGulfcountriesareexpectedtocontinuetheircurrentmomentumwithQatar onceagainenjoyingtheregionsfastestpaceofgrowthandjobcreation,thankstoitsbooming naturalgasexportsandinvestmentininfrastructureprojects. 2011 Economic Growth Forecast TheUAEislikelytobeamongtheregionsslowest %, Forecast growingeconomiesforathirdyear,thoughitcontinues 15.8% Qatar tobeatwospeedeconomy,withAbuDhabileading investmentandjobcreationwhilethebusinessclimate Oman 4.3% inDubairemainsmoresubdued. Kuwait 4.2% Acrosstheregion,anecdotalevidencesuggestsslowly Bahrain 4.1% risingbusinessconfidencewhichshouldhelpaccelerate economicactivityandwithitemployment.Obtaining Saudi Arabia 3.9% banklendingandcollectingcustomerpayments, UAE 3.1% however,remaintwokeychallengesformany businesses,preventingafullscalerecovery. Source: Economist Intelligence Unit 2011 Gulf Average Pay Rise Qatarsrecentsuccessfulbidtohostthe2022Football %, Forecast WorldCupislikelytobringamajorboost,primarilyto thecountryitself,butalsototherestoftheregion.As Qatar 7.2% thegamesare11yearsaway,however,thebulkofthe activitywillbeinfutureyears,withfirmsthisyear 7.0% Saudi Arabia positioningthemselvestosecureasliceoftheaction 7.0% Oman whenplansarefullylaidout. 6.3% UAE OneearlydividendfromthegameshasbeentheQatar 5.9% BahrainCauseway,aproposed40kmbridgetoconnect Kuwait thetwocountries.Havingbeenpreviouslyputonhold, 5.1% Bahrain thishasreportedlybeenresurrectedfollowing confirmationofthegames. Source: GulfTalent.com Survey of HR Managers
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Employment&SalaryTrendsintheGulf
EmploymentandSalaries Employmentislikelytogrowatamoderatepace,withanestimated61%offirmsexpectingto increaseheadcountin2011,comparedwith9%whoplantocutstaff.QatarandSaudiArabiaare expectedtoleadjobcreation,whileamongsectors,healthcareandretailwillseethefastestgrowth. BasedonGulfTalent.comssurveyofhumanresourcemanagers,salariesareexpectedtogrowbyan averageof6.6%in2011,upfrom6.1%in2010astheeconomystartstopickupandrisingsalariesin AsiacontinuetoputpressureonGulfpaylevels.Onceagain,QatarandSaudiArabiaareexpectedto lead,withaveragepayrisesof7.2%and7.0%respectively. Meanwhile,SaudiArabiaisexpectedtohavethe regionshighestinflationrateat6.3%,drivenby risingrentsandfoodprices,comparedwithQatars Salariesareexpectedtoincreasein inflationatjust2.3%,theregionslowest.Asa construction,duetotheexpected result,professionalsinQatararelikelytosee demandfromQataronqualified anotheryearofsignificantlyimprovingliving engineerstoruntheirinfrastructure standards,aswillthosebasedintheUAE. projects. GeneralManager Inthemediumterm,threefactorsarelikelyto ConstructionFirm,UAE impacttheGulfsemploymentmarket:thepriceof crudeoil,globalfoodpricesandregionalpolitical developments. OilPrice Thepriceofoil,thesinglebiggestdriverofGulfeconomies,hasbeenstableoverthelasttwoyears atwellbelowits2008peak.Recently,however,ithasbeenonanupwardtrajectory,drivenlargely byrisingdemandfromthefastgrowingChineseeconomy. Ifthetrendissustainedorevenaccelerated,itwillboostgovernmentbudgetsandspending,which willeventuallyfeedthroughtotherestoftheregionaleconomyandleadtorisingbusinessactivity anddemandfortalent. FoodPrices Followingaseriesofadverseweatherconditionsacrosstheworld,thepriceoffoodcommodities hasseenaverysharpriseglobally.Withtheregionrelyingheavilyonimportedfood,thishasbegun topushupthecostoflivingforresidentsintheGulfandisexpectedtodosoevenmoreoverthe courseof2011.
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Employment&SalaryTrendsintheGulf
Theresultinghigherinflationislikelytoputupward Food Price FAO food price Index* pressureonsalaries,particularlyforemployeesonlower 200 wages,forwhomspendingonfoodconstitutesalarger proportionoftheirhouseholdincomesandwherethe risingpriceswillthereforehurtmost. 150 MuchwilldependontheGCCgovernmentspositionon subsidies.SaudiArabiaandOman,forinstance,have 100 2005 2006 2007 2008 2009 2010 longofferedgenerousstatesubsidies,insulatingthe populationfromsuchvolatilityandtherealcostoffood. * Based on a food basket composed of cereals, oilseeds, dairy, meat and sugar. OtherssuchastheUAEhavehadmorelimitedsubsidies, Source: Food and Agriculture Organisation (FAO) ordirectedthemspecificallyattheirowncitizensrather thantheentirepopulation. Allstateshaveplanstoreducetheirburdenofsubsidies,althoughthismaynowbereviewedacross theregioninthelightofpopularuprisingswhichhavetakenplaceinsomeMENAcountriesagainsta backdropofrisingfoodprices. MiddleEastPoliticalTurmoil ThebroaderMiddleEastregionappearslikelytowitnessmajorpoliticaldevelopmentsin2011,and increasedpossibilityofconflictorturmoilwitharangeofrecentdevelopmentsinLebanon,Iran, TunisiaandEgypt.Anymajorupheavalmayimpactthebusinessclimateandemploymentmarketin theGulfinanumberofways. Intheshortterm,anysustainedturbulencein sourcecountries,suchasEgyptorLebanon,islikely tobenefitGulfbasedemployersasmore Recentlyithasbecomeharderto professionalsfromthosecountriesheadforthe hiresomeWesternnationals.They saferhavensoftheGulfstatessimilartothemass thinkweliveinawarzone. migrationthattookplacefromLebanontotheGulf duringthe2006conflict. HRManager LeadingEngineering Group, Bahrain Atthesametime,coverageofregionalunrestin internationalmediamaydeterprofessionalsfurther afield,whotendtoviewtheregionasone homogenousblockandconsideritunsafetoseek careersinaperceivedconflictzone.ThismaynegativelyimpactrecruitmentfromWestern countriestotheGulf,ashappenedin2003intheimmediateaftermathoftheIraqwar.
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Employment&SalaryTrendsintheGulf
Atpresent,theunemploymentrateinGulfcountriesismuchlowerthaninnonoilproducingArab states.Nonetheless,theissueisstilllikelytoreceivegreatergovernmentattentioninthelightof developmentsinNorthAfrica.Therenewedurgetoaddresstheunemploymentproblemcould meanyetmorepressureontheprivatesectorandhighernationalisationtargets.Theincreased regulatorypressuremaybefeltmoststronglyinOman,BahrainandSaudiArabiawhichaccordingto UNDPstatisticshavethehighestunemploymentratesamongGulfcountries. Inshort,theemploymentmarketisexpectedtocontinueitsgradualrecovery,butcouldbe impactedbyglobalandregionaldevelopments,andbygovernmentpolicyacrosstheregion.
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Employment&SalaryTrendsintheGulf
AppendixUsefulStatistics SalaryRisebyCountry%riseinbasesalary
Country Bahrain Kuwait Oman Qatar SaudiArabia UAE
2009 6.7% 4.8% 8.4% 6.8% 6.5% 5.5%
2010 4.9% 5.7% 6.4% 6.8% 6.7% 5.2%
2011F 5.1% 5.9% 7.0% 7.2% 7.0% 6.3%
Forecast Source:GulfTalent.comSurveys
Inflation
2009 2.8% 4.0% 3.5% 4.9% 5.1% 6.1% 2010 2.5% 3.9% 4.0% 1.9% 5.4% 1.6% 2011F 3.0% 4.8% 4.5% 2.1% 6.3% 2.1%
Country Bahrain Kuwait Oman Qatar SaudiArabia UAE
Forecast Source:EconomistIntelligenceUnit
EconomicGrowth%RealGDPChange
Country Bahrain Kuwait Oman Qatar SaudiArabia UAE
2009 3.1% 4.6% 3.0% 9.5% 0.6% 2.7%
2010 4.1% 3.4% 4.1% 14.0% 3.8% 2.1%
2011F 4.1% 4.2% 4.3% 15.8% 3.9% 3.1%
Forecast Source:EconomistIntelligenceUnit
Population
Country Bahrain Kuwait Oman
Total(millions) 1.1 3.5 3.0
Country Qatar SaudiArabia UAE
Total(millions) 1.7 25.5 5.5
Source:EconomistIntelligenceUnit
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Employment&SalaryTrendsintheGulf
Methodology ThisresearchreportwasbasedonGulfTalent.comssurveyof32,000professionalsemployedbythe 3,000largestcorporationsintheregion,asurveyof1,400humanresourcesmanagers,interviews withtopmanagementofselectedlocalandinternationalcompanies,aswellasareviewof macroeconomicsourcesandrelevantpressliterature. Allhistoricalpaydataincludedinthereportisbasedoninformationprovidedbyemployeesthrough anonlineEnglishlanguagequestionnaire,suitablyscreenedandstatisticallyanalysedtoarriveatthe precedingresults.Respondentswereagedbetween2260yearsoldandearnedanannualincome rangingfromUS$12,000toUS$200,000.Salaryincreasesweremeasuredforemployeesinongoing employmentonly,andexcludedthosewhochangedemploymentduringtheperiod.Salaryforecasts arebasedonestimatesprovidedbyhumanresourcesmanagers.Thesurveywasconductedduring December2010andJanuary2011. Feedback,commentsandqueriesregardingthisreporttobesentto: [email protected]
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Employment&SalaryTrendsintheGulf
AboutGulfTalent.com GulfTalent.comistheleadingonlinerecruitmentportalintheMiddleEast,coveringallsectorsand jobcategories.Itisusedbyover2millionprofessionalstofindcareeropportunitiesandisthe primaryonlinerecruitmentchannelfor4,000corporationsacross9countries.Headquarteredin Dubai,GulfTalent.comcoversthemarketsofSaudiArabia,Kuwait,Qatar,Bahrain,Oman,Egypt, Jordan,LebanonandtheUnitedArabEmirates. Contactandadditionalinformation MiddleEastlabourmarketresearch www.gulftalent.com/HRZone Recruitmentservicesforemployers andadvertisingopportunities Tel+97143672084 Oronlinewww.gulftalent.com JobopportunitiesintheMiddleEast www.gulftalent.com
Disclaimer&Copyright Thisdocumentshouldbeusedforinformationpurposesonly.GulfTalent.commakesnoclaimsor warrantiesregardingtheaccuracyorcompletenessoftheinformationprovided,andacceptsno liabilityforanyusemadethereof.Therecipientissolelyresponsiblefortheuseoftheinformation containedherein. GulfTalent.com2011.Allrightsreserved.
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