Qatar salaries move up despite oil slump

Salaries in Qatar have increased this year despite the steep fall in oil prices, latest data from global management consultancy Hay Group has revealed.

Salaries across Qatar went up by an average of 4.2 per cent in 2015, slightly lower than the 5.0 per cent, which was forecast in 2014, before the fall in oil prices.

Inflation rose to 3.5 per cent with increases in rent affecting the overall cost of living. As a result, the real growth in employees’ spending power is a negligible 0.7 per cent, the report said.

Qatar’s infrastructure development investments in the lead up to 2022 means that organisations in the banking, technology, real estate, construction and FMCG sectors are growing faster than the average of the economy and have awarded marginally higher than average increases of 4.1 to 4.5 per cent. Salaries within some of these sectors tend to be 10 to 20 per cent lower than Qatar’s all-industry average. As such, employees in these sectors are still behind their counterparts in the traditionally higher paying sectors such as oil and gas.

Hay Group’s annual Compensation and Benefit Report for Qatar – which was released in Doha this week – is based on the analysis of salary and benefits data from over 212 companies in Qatar, representing approximately 115,000 individual employees.

Volatile global markets and lower oil prices have not had the same level of negative impact in Qatar as in other regional markets.

Speaking about the research in Doha, Harish Bhatia – regional manager at Hay Group, said: “Companies across the GCC are treading with caution and we foresee a more conservative approach to both general spending and future investment plans in both private and public sector organisations in the coming year. However, we are yet to see any significant impact on typical indicators such as recruitment activity and compensation review plans.

“Approximately 92 per cent of companies paid the performance based target bonuses for their employees this year; this is relatively high by global standards. Leaders in Qatar are looking at bottom line performance being a key to the success of their business and where companies achieve this success, employees at the operational to middle management levels have received payments in line with their target bonuses,” said Bhatia. The same is not necessarily true for senior managers who received a slightly reduced bonus payment in 2015 due to reduced overall organisation performance.

As the GCC’s fastest growing economy, the outlook for Qatar is positive and organisations aim to achieve their targeted growth.  In this scenario, it is likely that employees across levels can expect to increase their performance based pay in 2016.

Although, cost of living increases have stabilized over time, some costs, in particular rental and educational costs, have prompted some organisations to review their allowance policy. About 25 per cent of the 212 companies participating in the survey are looking to increase their housing allowances by an average of 8 per cent in 2016.  These are companies that haven’t made changes in the last few years and are catching up with the current market conditions, it said.

Over 50 per cent of the employee population included in this study have been with their current employer for over five years. Bhatia said that this represents signs of increased stability when compared to previous years: “In the past, we have seen high levels of fluidity in the market with staff moving quickly from one job to another. Increased investment in training and development for both national and expatriate employees is helping organisations retain their staff over the longer term.”

Although improved, Qatar’s attrition rates are still high by global standards – mainly for Qatari national employees. Coupled with a rapidly growing economy, recruitment remains a key focus.

“In 2015 we have also seen a lot of recruitment in Qatar, despite the slump in oil prices. Approximately 34 per cent of the national workforce were recruited within the last two years; the same is true for 20 per cent of expatriate workers. This points to positivity around economic growth and but also of high attrition rates as new hires join to replace former employees. The trend is likely to continue into 2016 with 75 per cent of our participating organisations looking to hire across departments,” said Bhatia.

Cost-cutting and wise investments

Despite the positive outlook, the research shows that organisations are looking to cut costs with many focusing on training and development budgets. Commenting on this trend, Bhatia said the approach is not sustainable over the long term.

“In order for Qatar to develop its future leaders and achieve its goal of becoming a knowledge-based economy, organisations need to train and develop their employees. We also know that employees value development opportunities and organisations that lack these opportunities often struggle to retain their top performing talent. The cost of replacing staff can equal up to eight months’ salary, so companies simply must find alternative ways to maintain profitability in difficult times and cut down on development costs.”

Bhatia concluded: “In a time of economic uncertainty, it becomes important for organisations to differentiate its high performing employees – by higher than average pay increases, while it’s likely that poor and average performing workers will receive little if no increase. However, a business is nothing without its people and, during periods of a perceived slowdown of the economy, organisations must think creatively about how they motivate and reward their best employees with limited budgets.”

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