Cost of living in Gulf outstrips salary rise

DUBAI — The cost of living in the Gulf is outstripping salary increases, leading to an increasingly disgruntled workforce and a more volatile job market. Salaries in the region went up by 15 per cent on average in 2006, but the cost of living shot up by 24 per cent on average — and living expenses went up the most in the UAE.

By A Staff Reporter

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Published: Mon 19 Feb 2007, 9:23 AM

Last updated: Sat 4 Apr 2015, 9:55 PM

That was the verdict of a comprehensive online study of Gulf-based professionals by online recruitment company and leading market research firm YouGovSiraj. Entitled "GCC Human Resources Overview — Salaries, Cost of Living and Loyalty".

The survey interviewed a cross-section of 270,000 members of the website across the six GCC countries in more than 20 industry categories, from automotive to pharmaceuticals.

Employees in Qatar and Kuwait were awarded the highest pay rises in 2006, with an average 17 per cent increase, but average cost of living increases shot up by 27 per cent and 26 per cent respectively. The UAE was second on the list with a 15 per cent pay hike, but it also recorded the biggest cost-of-living jump in the Gulf at 28 per cent.

"The UAE was in no uncertain terms the worst affected in terms of erosion of consumers' real purchasing power with salaries being outpaced by cost of living increases to the tune of over 13 per cent," the survey concludes.

Looking at the regional picture, workers in the private sector fared better than their government peers, earning an average pay hike of around 17 per cent compared to just under 13 per cent for public sector employees.

The banking and finance sector awarded the most generous raises in 2006, increasing salaries on average by 19.5 per cent. Healthcare professionals (excluding doctors) received only 11.2 per cent more pay last year.

Despite double-digit raises, most Gulf professionals want more — and employees in the UAE and Bahrain consider themselves the most deserving. The raise they felt they 'deserved' in 2006 was put at 33 per cent reflecting the higher cost of living in both countries.

Employees were the least demanding in Saudi Arabia, where the average "deserved" pay rise was recorded as 27 per cent. Overall, public sector employees in the GCC felt the most disgruntled, claiming they justified a pay hike of 39 per cent on average in 2006.

Gulf countries with large expatriate workforces appear the most volatile in terms of workforce demographics. In Qatar, 37 per cent of the survey's respondents said they would consider going back to their home country or relocating elsewhere in the Gulf to boost pay.

And despite the cost of living in the UAE shooting up 28 per cent, nearly half of the polled respondents said Dubai is their preferred place of work.

Kuwait comes in with the highest average monthly salary in the Gulf, with $3,100. Saudi Arabia is second with $3,000, and the UAE is in fourth place with an average monthly pay packet of $2,750.

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