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Saudi salaries up 4.5% in 2015 despite falling oil prices – report

Saudi salaries up 4.5% in 2015 despite falling oil prices – report

Employees in the kingdom are expected to record a 5 per cent salary hike in 2016, the report by Hay Group found.

Salaries across Saudi Arabia have increased by an average of 4.5 per cent in 2015 – slightly below the rate of 5 per cent which had been forecast last year, according to a report by consultancy Hay Group.

Wages grew despite the slump in oil prices, which are down almost 50 per cent since June last year, the report stated.

Hay Group’s regional manager for Services Wendell D’Cunha said: “With inflation at 2.6 per cent, the increase represents a growth of 1.9 per cent in employees’ real spending power.”

The highest increases have been seen by lower level employees with an average of 5.7 per cent.

“The difference between salaries of senior executives and entry level workers has grown more slowly than in other parts of the Middle East,” said D’Cunha.

“However with the average head of department earning 7.3 times more than the average entry level staff member, Saudi Arabia is still well above the regional average in this regard,” he added.

Overall, the report also found that employees in the banking sector fared better than their peers with an average 7.1 per cent increase.

As a percentage of basic salary, companies in the banking and retail sectors also paid the highest bonuses.

“The banking and retail sectors are both very performance driven and as such, we expect to see a large portion of total pay being paid as a variable bonus,” said D’Cunha.

On average senior management employees were the only ones who received bonuses that were above target.

The report also found that women, who comprised 5 per cent of the research, are paid an average of 10 per cent more than the general industry average.

“This is because there are no women represented within the large, low-paid labour force and instead they fill mainly support positions in industries that tend to pay more,” explained D’Cunha.

“In the banking sector, which does not have a low-skilled labour force, women are paid an average of 10 per cent less than their male counterparts.”

While over 50 per cent of the total employees surveyed have stayed with their current company for more than five years, organisations in some sectors are finding it difficult to retain their staff.

Nearly 17 per cent of the workforce has spent less than a year with their organisation.

In the insurance sector turnover was approximately 40 per cent in 2015 while in retail the turnover was approximately 25 per cent, the report stated.

Looking ahead, despite the continuing economic uncertainty caused by falling oil prices and the poor performance of global markets, businesses are forecasting that salaries will increase by approximately 5 per cent again in 2016, the report found.

“In these times, businesses concentrate their compensation spend on high performing employees while below-average performing workers will receive little or no increase,” said D’Cunha.

“However, a business is nothing without its people and, during periods of low growth, organisations must think creatively about how they motivate and reward their best employees.”

Hay Group’s report measured salary payments made by 482 companies, representing 430,000 employees in the kingdom.

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