Conservative outlook for salaries and bonuses in GCC for 2018

By The HR Observer

Professionals from a wide range of GCC countries and industries predict that C&B strategies will be much more cautious in terms of salary and bonus increases in 2018, although greater investments in employee engagement, training and development will help drive long-term C&B success.

Informa’s sixth annual GCC Compensation and Benefits Trends Report points towards another year of uncertainty, translating into mostly conservative and cautious C&B strategies. Predicted lower level salary increases are significantly down, with 20.96% of companies expecting to give only a 3.5% increase or less. 10.51% of companies expect to enact pay freezes and 3.36% believe that they will have to reduce salaries. Similarly, fewer companies are willing to experiment with adjusting their healthcare provision package (a vital C&B consideration from last year) or offering wellness programmes.

The spectre of VAT implementation is also adding to the uncertainty and caution permeating 2018’s C&B landscape. The majority (58.58%) of companies will not consider VAT when deciding whether to increasing salaries in 2018/2019, while only 14.48% said that VAT would be an influencing factor. The remainder (26.96%) are still undecided about the impact of VAT on salaries.

However, plenty of GCC companies are still planning to develop dynamic C&B strategies this year. “Improving employee engagement” has become the top area of focus for 2018, mentioned by 45.34% of the survey’s participants. This is closely followed by “improving employee retention”, which is up to 41.18%.

To satisfy these focus areas, more companies are investing in training and development programmes, pension option offerings and vehicles to improve the link between employee performance and pay. Additionally, instances of larger pay increases are on the rise, as 17.23% expect to increase salaries by between 5%-6.5% this year.

Download the full report here