Saudi Arabia continues to lead the region in salary increases, according to a GCC-wide survey of 600 multi-national companies and locally-owned conglomerates by Aon, a leading global professional services firm providing a broad range of risk, retirement, and health solutions.
The largest study of its kind in the Gulf region showed that, just as in 2016, actual salary increases remain lower than forecast, influenced largely by a slow economy and low oil prices. The region-wide VAT, a tax on consumption, of 5% to be implemented in January 2018 is expected to help improve GDP growth; however, it will add to the rising inflation in the region, leading to cost pressures. While employers choose to remain conservative in the projected salary increase of 2018, we may witness an upside in the actual salary increase, thanks to an improving economic situation as a result of increased government spending, stabilized oil prices, and the effects of economic transformation programs.
| Including zeros and paycuts | |||
| Country | 2017 Projected % | 2017 Actual % | 2018 Projected % |
| Saudi Arabia | 4.9 | 4.4 | 4.5 |
| Kuwait | 4.8 | 4.3 | 4.5 |
| UAE | 4.6 | 4.3 | 4.3 |
| Qatar | 4.5 | 4.2 | 4.5 |
| Bahrain | 4.7 | 3.9 | 4.0 |
| Oman | 4.6 | 3.9 | 4.3 |
Actual salary increases this year are highest for the Life Sciences (5.1%) and Hi-Tech sectors (4.6%), while the Construction/Engineering and Transportation/Logistics/Shipping Services sectors suffered the lowest salary increases at an average of just 2.4%. This is similar to last year, where Life Sciences was also a highest paid sector (together with Consumer Products) and Construction/Engineering experienced the lowest salary increase (together with the Energy sector).
Robert Richter, GCC Compensation Survey Manager, Aon Hewitt Middle East, said: “Despite lower than projected salary increases this year, there is optimism in the region over KSA Vision 2030 and Expo 2020 Dubai with the potential for thriving new industries and a significant level of job creation in the region as a whole. With the stabilisation of oil prices, we can also expect the economy to stabilise and strengthen in the coming years.
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