Real salaries in the UAE rose 5.5 percent this year but this growth will become slower in 2020 due to a rise in inflation, according to the latest salary trend report from ECA International.
It predicted that next year's real salary increase of 2.9 percent in UAE will be highest in the GCC region, followed by 2.4 percent in Saudi Arabia, 2.3 percent in Qatar and 2.2 percent in Oman.
In 2019, Saudi Arabia recorded a 5.8 percent increase in real salary, followed by 5.5 percent in the UAE, 4.2 percent Qatar and 3.2 percent in Oman.
"Inflation in the region is currently very low and understandably that is dominating the news now, but if the experts are correct then prices will start to rise again next year and this will eat into the salary increases seen by staff in the region," said Steven Kilfedder, production manager at ECA International.
The International Monetary Fund predicted in its latest World Economic Forecast that following negative inflation in the UAE, Saudi Arabia and Qatar in 2019, consumer prices will rise in 2020. The IMF forecast 1.2 percent in the UAE and 2.2 percent inflation in Saudi Arabia and Qatar for next year. Overall inflation for Middle Eastern oil exporters will rise from 8.2 percent in 2019 to 9.1 percent in 2020.
"Inflation is expected to rise throughout the Middle East as the stable commodity prices boost domestic demand. This has seen all of the surveyed Middle Eastern nations drop in the rankings compared to last year and Saudi Arabia, the UAE and Qatar have all dropped out of the global top 10 as rising inflation cuts into the real salaries of workers in the region," said Kilfedder.
Chris Greaves, managing director at Hays Middle East, says when it comes to employees' attraction and retention, the first thing that comes to mind for many is salary but that is not the case. "Salary is the main factor keeping employees in their current role or the reason an employee is leaving is that they have been offered a higher salary at another company," he said.
"However, we know - from conversations we have had with our candidates and findings in this research - that this is simply not the case. In fact, our survey has found that salary ranks as only the third most important reason why working professionals in the GCC are open to new job opportunities and the fourth most significant reason why they left their previous employer," says Greaves.
A Hays survey found that only 10 percent of workers in the GCC look to start a new job due to salary while just 9 percent left the company due to pay.
According to ECA International, Asian nations lead the way again for real salary increases globally, with 13 out of the top 20 increases being seen in Asian nations, and all of the top five. ECA forecasts the biggest real salary increase will be witnessed in India at 5.4 percent followed by Vietnam (5.1 percent), Indonesia (4.6 percent), Cambodia (4.2 percent) and Thailand (4.1 percent).
"Salaries in India are set to rise significantly, with a 5.4 percent increase almost four times as high as the expected increase in Hong Kong. Despite inflation rising slightly from 2019 and the economy slowing slightly, workers based in India can expect to see another bumper increase to their salaries. However, unless growth picks up again salary rises of this scale may not be sustainable in the longer term" said Quane.
It will be a very different story for their neighbors Pakistan in 2020 though, which are the only Asia-Pacific nation predicted to see a decrease in their real salary.
