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Gulf Salary and Employment Outlook 2016-17

Professionals from all over the world love to work in GCC countries mainly for financial and career growth.

Unfortunately, due to current economic and political scenario, opportunities have become limited. Think twice before moving to GCC countries for employment.

There is an obvious decline in the employment opportunities in the region especially for expatriates. Oil based economies are under severe pressure since the middle of 2014.

Decline in oil prices mainly caused by increased supply from newly developed shale technology and OPEC’s decision to maintain production to force higher-cost competitors out of business. Removal of sanctions on Iran further increased the supply of oil.

According to the Ministry of Overseas Pakistanis and Human Resource Development Yearbook 2013-14, more than 3.6 million Pakistani nationals are working in Gulf. Ongoing crises will definitely influence their employment conditions and decrease the remittances.

The middle-east, and in particular the Gulf Cooperation Council (GCC) countries, are currently affected by macro-economic instability and a difficult job market, mainly due to the drop in oil prices.

This calls for a thorough and challenging transformation that GCC countries will need to undergo to be able to achieve desirable growth. Gulf countries never anticipated low oil prices, continuous low oil price is kind of a shock to the system. Currently they are depending on their reserves, several countries will run out of funds in some years. Governments have responded by borrowing, reducing generous state subsidies on fuel, water and electricity, cutting all non-essential investments and putting some projects on hold, while maintaining spending on critical infrastructure projects. This has inevitably impacted the flow of funds into the private sector, especially industries heavily dependent on government projects. War in Yemen, political crises in Syria, Egypt and Iraq has effected the geopolitical situation of Middle East, and effecting the overall labor market.

Employment Trend

Hiring activity reduced in GCC region in 2016 as compared to the previous year, with an obvious reduction in the demand of manpower. Cancellation of several billion dollars projects led to downsizing. Decrease in Government spending, forced firms in construction and banking to lay off their employees. Many global companies have trimmed their structure and reduced the manpower.

Firms have become very cautious and vigilant in hiring new employees. Most of the companies are merging roles and outsourcing the functions to reduce the staff and operational cost. Business leaders are retaining or looking for new candidates with diverse skills and experience, demand for multi-taskers and generalists has increased as compared to specialists.

The cooling of some areas of business have caused many GCC firms to hire replacements rather than actively recruit. This means that those seeking employment in some of the more competitive fields will want to be able to demonstrate skills across multiple areas. With job titles and roles being merged or consolidated, a diverse skill set and multiple sources of experience will pay off.

Nationalization

Implementation of nationalization policies in the private sector also squeezed the employment opportunities for expatriates. Saudi Arabia and Kuwait recently extended the job categories reserved for nationals. As so many in the GCC have seen, the aim towards a more nationalized workforce will continue. Just as Bahrain has been able to achieve nearly 100% Bahrainization in some fields, other GCC countries will continue to support nationals seeking work in the private sector. While not good news for expats, it is a good tip for those seeking employment in their homeland.

Salaries and Benefits

Economic downturn in the region pressed the salary increments, average pay rises in 2015 dropped down to 5.7%, from 6.7% in the previous year. Employers are shifting their focus to performance based variable pay to reduce the fixed salary cost.

Among all the GCC countries, Qatar and Oman had the highest salary increments in 2015, due to development activities for FIFA 2022 in Qatar and unionization of the workforce in Oman. Bahrain witnessed the region’s lowest average pay increase due to political turbulence and oil crises.

To manage the dynamic market needs, talent management is crucial, that’s why HR Professionals observed highest average salary increments at 7.0%.

Due to slow activity in the construction industry, engineers had significantly lower salary increases at 6.0% compared to 7.1% in 2014. If seeking a field with the highest anticipated pay rise, look to retail. Growing demand for retail products and stability within this sector throughout the region, has created an anticipated increase of nearly 7% in retail pay rates.

References:
Ministry of Labor, Manpower, and Overseas Pakistanis
Gulf Talent “Salary & Employment Trends Report 2016”
HAYS “Salary and Employment Report 2017”

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