Qatar employers are expected to show more restraint when doling out raises in 2016 compared to past years thanks to a slowing economy, a new report has found.

According to projections made by HR consulting firm Mercer, remuneration increases in Qatar will average 4.9 percent this year.

That’s the first time the figure has dipped below 5 percent in five years, the company said in a statement.

The forecast comes as inflation in Qatar remains modest by international standards, although researchers at Qatar National Bank said they expect the rise in the cost of living to accelerate over the next two years.

In addition to base salaries, the survey takes into account non-financial compensation such as housing. Mercer Middle East principal Nuno Gomes said:

“2016 is likely to be characterized as being a year of restrictions, caution and a focus on improved efficiency.”

He added that weak oil prices, reduced government spending and underperforming financial markets are “subduing companies’ confidence and curtailing investment.”

Mercer said it expected employees elsewhere in the GCC to see similar raises. In the UAE, remuneration increases are also expected to average 4.9 percent, slightly less than the 5 percent forecast in Saudi Arabia.

Qatar forecast

Last month, Qatar’s Ministry of Development Planning and Statistics cut its economic growth forecast for 2015 nearly in half to 3.7 percent.

The explanation, the ministry said, “lies entirely in the performance of the oil and gas sector.” Low energy prices, the government added, have discouraged oil and gas firms from making additional investments in Qatar.

Several of the country’s largest energy firms, such as RasGas, Maersk Oil and Qatar Petroleum have all laid off staff over the last year.

Meanwhile, regional competition for skilled construction workers – which has driven up wages in recent years – is easing as governments in the region cancel or postpone projects in response to lower revenues.

Not everyone is taking such a pessimistic view, however. Chairman of the Qatari Businessmen’s Association told the Peninsula yesterday that tumbling oil prices would not hurt private companies’ spending.

According to Sheikh Faisal bin Qassim Al Thani, who is also head of Al Faisal Holding:

“We don’t see any changes in the budget of private sector companies in Qatar due to the lower energy prices.”

Are you expecting a raise this year? Thoughts?