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“Current forecast for pay trends in the UAE looks quite favourable”, says industry expert

Tuesday, 28 November, 2017

Although the current economic climate in the UAE is causing some uncertainty, owing to the effect of the implementation of value added tax (VAT), declining oil prices and the high inflation rate, some good news is expected for 2018.
 
During The Human Resources Forum’s (THRF) seminar, hosted in conjunction with the University of Wollongong in Dubai (UOWD), Global Remuneration Expert Robert Mosley provided a detailed insight into the current pay trends and the forecasts expected in the new year.
 
“We are very optimistic about the latest basic salary pay trends, which is currently in the region of 2.5%, an increase of 0.3% in comparison to the previous year, with the possibility of going up in 2018”, Mr Moseley said. 
 
The latest statistics also show that 34 per cent of employees received no increase during 2016-2017 whilst 66 per cent of employees received an increase averaging 3.6 per cent with the majority based on performance merits. Interestingly, the basic salary trends based on the various industry sectors are a complete reversal from what happened in 2016. For example, in 2016 the Transportation, logistics and cargo; Insurance, Retail, Pharmaceutical and Education and Banks, Financials and Conglomerates sectors had the lowest increases whilst the Real Estate and Construction; FMCG, Food & Beverage, Hotels-Hospitality and Healthcare and Hospitals had the highest increase in salaries. However, in 2017 the figures were quite the opposite.
 
The 2017 guaranteed fixed cash trends (basic salary plus allowances), indicates that UAE Nationals are being paid an average of 45 per cent more than non-nationals with the gap on the increase, whilst the benefit cost increased by between 5 percent and 7 per cent in 2017. Medical insurance and education benefits have seen the most significant negative changes, owing to these services being quite expensive for employers to provide.  
 
Mr Moseley commented that the salary forecasts for 2018 look quite favourable and he is expecting rises to be in the region of 3 per cent.
 
During the seminar, Mr Moseley also discussed performance appraisals, stating the traditional performance appraisal system would soon make way for a new system called MSC. MSC is monthly short-term specific Must do, Should do and Could do goals and targets. Employees will be rated in short 10-minute session with their managers instead of the long two hour meetings with line managers on a bi-annual basis. At the end of the year, a simple calculation will determine the annual average and the employee will be scored accordingly. This system is considered to be more effective and more productive than the current system.
 
Concluding the seminar, he provided a summary on how to conduct performance appraisals stating the three fundamental components, which are objective setting, competencies and behaviours, and development planning. He also talked about the problems with the current five and six-point scoring system and how to avoid forced distribution of ratings. 
 
Mr Mosley is a founder member of THRF and he now runs his own company, Lemon Pip Consulting Limited. He is also a Master Trainer and member of the Reward Advisory Board for CIPD. 
 
The THRF regularly runs events at UOWD. For further information about THRF events, contact Ms. Alisha Dias at alishadias@thrf.ae or Dr Alison Thirlwall at alisonthirlwall@uowdubai.ac.ae.