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Omar Chatriwala / Doha News

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Though Qatar residents have so far been relatively well-protected from the effects of tumbling oil prices, employees are not much better off this year thanks to subdued pay rises and the soaring cost of living, a new survey has found.

According to the annual Compensation and Benefit Report for Qatar by global management consultancy Hay Group, most people surveyed received a pay rise of 4.2 percent, just above the rate of inflation.

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Peter Kovessy

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According to the report, that rate now stands at around 3.5 percent, and has risen mostly due to increasing cost of housing.

Additionally, some 92 percent of firms paid performance-based target bonuses for their staff this year.

The latest edition of the report studied salary and benefits data from more than 212 companies in Qatar, representing approximately 115,000 individual employees.

More staff

Despite a slow-down for the energy sector, Qatar’s development targets ahead of the 2022 World Cup mean that banking, technology, real estate and construction are continuing to boom.

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Employees working in these fields are seeing slightly higher than average pay rises of up to 4.5 percent this year, the report states.

Meanwhile, three-quarters of the companies surveyed said they planned to hire new staff across all levels through 2016.

This hiring boom partly reflects expansion, as the deadline to finish Qatar’s various ongoing infrastructure projects gets closer.

But it is also due to high rates of staff attrition, which is most notable among Qatari nationals, the report said.

‘Conservative’ spending

However, it also warned that many firms are planning to tighten their belts in the year ahead, if oil prices continue to remain low:

“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 organizations in the coming year.

However, we are yet to see any significant impact on typical indicators such as recruitment activity and compensation review plans,”  Harish Bhatia, Hay Group’s regional manager, said in a statement.

Employers are most likely to try to save costs through reducing their budgets for training and development in the coming year, Bhatia said.

But he warned that such a policy is not sustainable in the longer term, as employees will look to switch jobs if they don’t feel they have sufficient opportunities in their existing company.

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“In order for Qatar to develop its future leaders and achieve its goal of becoming a knowledge-based economy, organizations need to train and develop their employees. We also know that employees value development opportunities and organizations that lack these opportunities often struggle to retain their top performing talent,” Bhatia added.

During tough economic times, employers should try to retain their best staff by making pay bumps reflect performance, with top employees getting bigger increases, while those who don’t meet targets receive little or no rise, the report suggested.

The average pay rises received this year in Hay Group’s report are slightly less than the 2015 predictions made in separate study published last month by global recruitment organization Aon Hewitt.

It forecast hikes of 5.2 percent for Qatar employees during this year – less than that expected for employees in Saudi Arabia, Oman and Kuwait, but ahead of employees in the UAE and Bahrain.

Inflation hikes

While QNB said that Qatar’s cost of living is likely to remain stable through the remainder of this year, inflation is predicted to pick up again starting in early 2016, driven by continued population expansion and rising global food prices.

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Two of the biggest contributors to rising costs are continued rent hikes for residential properties – up 2.4 percent on the same period last year – and significant increases in the cost of education, with school fees up 11 percent year-on-year.

Taking these costs into account, a quarter of the companies surveyed by Hay Group said they would be reviewing their employees’ housing allowances, with increases of up to 8 percent planned to help offset some of the rent rises.

However, the firms planning the increases were among those that have not raised their housing allowance in recent years and so were still playing catch-up with the market, the report said.

Late last year and earlier this year, rents were increasing by 8 percent year-on-year. An international report by Numbeo, published in July this year, found Doha to be the world’s 10th most expensive city for renting a home.

Thoughts?

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Omar Chatriwala / Doha News

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Despite plummeting oil prices, companies in Qatar are still planning to spend money to attract and retain staff, with salaries forecast to rise by an average of 5 percent next year, according to a new survey.

Qatar’s projected salary bump for 2016 puts it on par with the rest of the Gulf, according to the latest edition of the Aon Hewitt GCC Salary Increase Survey. Employers in Oman and the UAE also said they were looking at 5 percent salary rises next year.

GCC Salary Increase Survey 2015

Aon Hewitt

GCC Salary Increase Survey 2015

Kuwait firms are expecting to offer the biggest bumps to their employees’ pay checks, forecasting increases of 5.2 percent, while in Saudi Arabia companies forecast raises of 5.1 percent.

Bahrain’s forecast was the modest at 4.7 percent, according to the results of the annual survey, which questioned 600 multinational and locally-owned companies about their 2016 salary spending forecasts (including 68 firms in Qatar).

Slowing down

While the projected figures are likely to be welcomed with open arms by current employees and those considering a job in Qatar, the increases are more conservative than companies have predicted in previous years.

Meanwhile, actual pay increases have fallen a little short of projections in the last two years, by around 0.5 percentage points.

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For example, firms in Qatar said they planned to award salary increases of 5.6 percent in 2014, while the actual rises given to staff were 5.1 percent. Similarly, for this year, the projected rise was 5.2 percent, while the raise employees actually received was recorded at 4.7 percent.

If 2016 follows the same trend, staff could be looking at a real raise of around 4.5 percent, based on Aon Hewitt’s figures.

The global recruitment organization’s salary projections for employees in Qatar and the wider region are more conservative than forecasts made in May this year by online recruiters GulfTalent, which said Qatar employees’ pay bumps during 2015 could be around 8.3 percent – the highest in the region.

The annual Employment and Salary Trends in the Gulf study said that many companies across Qatar would continue to expand, hiring more staff and offering better salaries to attract and retain talent, as they strived to meet looming deadlines for the various construction and infrastructure projects ahead of the 2022 World Cup.

The report stated that sectors such as hospitality and construction would continue to thrive, while low oil prices have forced many energy companies to delay or cancel projects, freeze recruitment, lay off staff and cut budgets.

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Two of the main staffing challenges for firms in Qatar are attracting the right people to move to the state, and keeping the good ones here.

The GulfTalent report found that while Qatar was the second-most popular Gulf country for expats to work in after the UAE, it has one of the region’s lowest retention rates.

This is because “the high cost of living and the ban on expatriates switching jobs prompt many to leave,” the report stated.

Cost of living

Increases in everyday costs, such as accommodation, schooling and even food prices have been eating into the savings of Qatar residents over the last few years in particular. Additionally, while inflation has been relatively stable in the last few months, it is set to increase again through 2016.

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Peter Kovessy

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In a report issued last month, Qatar National Bank (QNB) said prices for consumer goods will remain subdued until the New Year, when the country’s ongoing population growth – combined with an expected rise in global food prices – will drive up inflation.

The average 2016 inflation rate forecast among 19 financial institutions, in a report published earlier this year by the Ministry of Municipality and Urban Planning, was 3.8 percent.

Hikes in residential rents remain one of the biggest issues for people trying to save here. While QNB figures showed that year-over-year increases in rent inflation slowed from 4.6 percent at the start of the year to 2.3 percent in July as new homes came onto the market, anecdotally many residents say their rent is being increased by several thousand riyals a month when they renew their contracts.

These personal experiences were reflected in the results of a global mid-year cost of living index published by Numbeo this summer, which found Doha to be the world’s 10th most expensive city in which to rent a home.

Still, the latest Aon Hewitt report described the 5 percent forecast for salaries next year as a sign of optimism for employees.

“Overall the outlook for 2016 may not be as positive as recent years, but the news that employers are predicting salary increases in the 5% range next year should come as a comfort to employees, suggesting that there is still optimism in the market,” Robert Richter, GCC Compensation Survey Manager for Aon Hewitt Middle East, said.

Do you expect to get a salary rise next year? Thoughts?

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Omar Chatriwala / Doha News

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Many employees working in Qatar believe their pay is failing to keep pace with ongoing increases in the cost of living, according to the results of a recent regional survey of workers’ salaries.

While a slim majority of expats still say they’re better off living and working in Qatar than their home countries, human resources experts say local employers need to address the perceived compensation gap if they want to recruit and retain talented professionals.

The latest study of salaries in the Middle East and North Africa (MENA) by online recruitment company Bayt.com and market research agency YouGov found that 85 percent of Qatar respondents said they felt the cost of living in this country rose during 2014.

However, more than a third (38 percent) said they did not get any increase in their salaries during the year to compensate.

Of those who felt their daily costs had gone up last year, more than a quarter (27 percent) said their expenses had increased by more than 20 percent.

Higher rent, food and utility bills were the key reasons for the increased costs, respondents said.

Excerpt from 2015 MENA salaries survey

Bayt.com

Excerpt from 2015 MENA salaries survey

Looking ahead, 80 percent of Qatar employees predicted their living costs would keep rising throughout this year, compared to slightly more than half (55 percent) who expected to receive a salary raise during the same period.

Residents across the Gulf appear to be expecting a more expensive year ahead, though not to the same extent as those in Qatar. The percentage of respondents in nearby nations who also forecast increased living costs in 2015 were:

  • Kuwait (80 percent);
  • UAE (79 percent);
  • Oman (77 percent);
  • Saudi Arabia (75 percent); and
  • Bahrain (71 percent).

Citing reasons for their static salaries, 21 percent said it was due to “poor corporate performance and decreased profitability of their company” while nearly a quarter (24 percent) attributed it to a “bad economy,” the survey found.

Economic impact

Falling global oil prices have affected companies in Qatar, particularly in the energy sector where some firms are reining in non-essential spending, laying off staff or implementing hiring freezes.

Meanwhile, Qatar’s cost of living keeps climbing, mainly due to increases in residential rent as the nation’s growing hospitality, healthcare and construction sectors fuel demand for housing.

Real estate experts previously told Doha News that the supply of quality housing is not keeping up with need, meaning residential rent is expected to continue climbing at a rate of 5 to 10 percent throughout 2015.

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Patrick Gage/Flickr

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According to Bayt.com, higher living costs appeared to have had an impact on some employees’ savings, with nearly a fifth of Qatar respondents admitting they saved nothing from their monthly salaries last year.

However this is less than the regional average, where nearly a third (32 percent) said they saved nothing during 2014.

In contrast, nearly three-quarters (74 percent) of people working in Qatar said they managed to send some money home last month, and more than half of all respondents (53 percent) said they were better off in Qatar in terms of their quality of life than they would be if they were working and living in their home countries.

Suhail Al-Masri, vice-president of sales for Bayt.com, said the survey findings showed “a growing gap between the cost of living in Qatar and salary earnings and propensity to save.”

In a statement, he added:

“Most respondents (79 per cent) from across the Middle East and North Africa region are expecting a further increase in the cost of living in 2015. This means that employers must quickly address this widening disparity if they want to effectively tap into the local and regional talent pool.”

Data for the latest Bayt.com survey was collected online from March 30 to April 6. Results were based on a sample of 12,158 respondents from the UAE, Saudi Arabia, Kuwait, Oman, Qatar, Bahrain, Lebanon, Syria, Jordan, Egypt, Morocco, Algeria and Tunisia.

Are you expecting a raise this year? Thoughts?