Employment & Salary Trends in the Gulf

Employment & Salary Trends in the Gulf 1

Executive Summary Despite the slump in oil prices and conflicts in neighbouring countries, the Gulf region continues to enjoy a stable pace of economic growth, with most firms maintaining employment levels or increasing headcount. Most governments have so far used their large reserves to keep spending and investment plans at previous levels. The impact of the oil price fall has so far been limited to firms in the oil and gas sector, some of which have been downsizing. There has also been some slowdown in and, the countries with lower cash reserves where governments have started to reduce their investment on infrastructure projects. Across the region, the fastest growing sector is healthcare, driven by a combination of growing populations, massive government investment, and regulatory changes making health insurance mandatory for employers. While the region remains a major importer of expatriate talent, the need to create jobs for a fast-growing local population continues. As such, governments are increasing the pressure on employers to reduce their reliance on an expatriate workforce and fill a higher share of their roles with nationals. This is most notable in and, where nationalisation is the biggest human resource challenge for employers. from absorbing this pool of talent. Pay rises across the region averaged 6.7% in, the highest average increase since the financial crisis, and are projected to accelerate further in 2015 to 6.9%. This is driven by the competition for talent and rising cost of living and, in the case of, increasing unionisation of the workforce. At the same time, the strength of the US dollar, to which most Gulf currencies are pegged, is helping make Gulf salaries more attractive for expatriates, reducing upward pressure on wages. The, and particularly Dubai, remain the region s most popular destinations for expatriates. ranks second in popularity with newcomers, but has very low retention as the cost of living and the ban on expatriates switching employers drives many to leave. The outlook for 2015 remains positive, with employers in most sectors expecting to grow. However, much depends on what happens to the oil price. With the region s heavy reliance on expatriate talent from India, the accelerating economic growth in India can also pose an increasing challenge to employers. GulfTalent April 2015 Conflicts and tensions across the broader Middle East region have increased the supply of talent from the affected countries to the Gulf. However, several Gulf countries have imposed restrictions on nationals of war-torn countries seeking employment in the Gulf, preventing employers Employment & Salary Trends in the Gulf 1

Contents Economic and Political Background 3 Recruitment Trends 4 Mobility 6 Salaries 7 2015 Outlook 9 Country Highlights 11 Appendix: Useful Information 12 Research Methodology 13 About GulfTalent 14. 2

Economic and Political Background owth comparison graph wth Stable economic growth India China GCC US EU The regional economy continues to grow at a stable pace, faster than most of the world, though below the levels seen in the fast-growing markets of India and China. Continued investment by GCC governments in infrastructure development remains 1.3% a key driver of growth and job creation, with Russia projects such as Gulf Railway, Jeddah Metro and stadiums driving significant activity. GDP Growth comparison graph GDP GDP Growth Growth %, 2015 %, 2015 3.5% 3.2% onomic Intelligence Unit,, Asian Development Bank India China GCC US 7.2% rence box ( 7 cm X 4 cm) 3.2% 7.8% EU 1.3% -4.0% Russia Source: Economist Intelligence Unit, Source: Economist, Economic Asian Intelligence Development Unit, Bank Economist, Asian Development Bank 7.8% 7.2% 3.5% Low oil prices With the region heavily dependent on exports of crude oil, the collapse in the oil price during Size reference box ( 7 cm X 4 cm) the second half of has reduced growth expectations. For the time being, damage seems to be limited to the oil sector, and some government-linked projects in and, the more vulnerable countries with smaller reserves. Others such as have seen almost no impact, as they draw on their massive cash reserves to maintain spending and investment. Oil price graph Crude Oil Price USD per Barrel (Brent) USD per Barrel (Brent) 120 100 80 60 40 2012 2013 2015 Source: World Bank Source: World Bank Oil price graph Crude Oil Price Regional conflicts USD per Barrel (Brent) 120 With the exception of, Gulf countries have been islands of stability in a region torn by tension 100 and conflict. However, on-going violent conflict in 80 Middle East Key Hotspot Syria, Iraq and Yemen, and tensions elsewhere 60 in Lebanon and Egypt have had some impact, Middle East Key Hotspots in some cases 40 benefiting the Gulf countries by 2012 2013 2015 Middle East Key Hotspot increasing the flow of talent and capital to them. Middle East Lebanon Key Conflict Iraq Source: World Bank Zones Middle 2015 East Key Hotspots Egypt Syria Syria Lebanon Jordan Egypt Iraq Middle East Key Hotspot Middle East Key Hotspots Lebanon Egypt Yemen Syria Saudi Arabia Yemen Iraq UA Yemen Employment & Salary Trends in the Gulf 3

Recruitment Trends leading job creation Across the region, more firms increased headcount last year than those who reduced it. topped the list, where 72% of firms reported expansion. had the lowest net Employment growth graph job creation, with only 22% of firms expanding. Employment Growth by Country Employment Growth by Country Net percentage of firms which increased Net percentage of firms which increased headcount, headcount 72% 61% 59% 22% 0% N/A* * Insu cient data for Source: Insufficient GulfTalent data for. Survey of HR Managers Dubai growth. slowdown While remains the biggest net creator of jobs, the and particularly Dubai continued to enjoy a recovery, witnessing Employment growth by sector a healthy increase in their share of regional Employment Growth by Sector recruitment Net % of firms activity. which increased on headcount the other in hand saw a slowdown in recruitment during, driven by Healthcare 82% uncertainty over its World Cup award, and internal Education 80% pending Media & reviews Marketing on the awarding 80% of projects. Transport & Logistics 78% Engineering 77% Retail & Consumer 72% Banking 63% Travel & Hospitality 36% Oil & Gas 34% Recruitment volume graphs Recruitment Volume by Location Percentage of vacancies advertised on on GulfTalent * * // 11% 10% 11% 8% 9% 16% 17% 20% 16% 10% 20% 18% 19% 23% 20% Recruitment 18% 17% 17% volume graphs (Exc: Dubai) 22% 14% Recruitment Volume by Location Percentage of vacancies advertised on GulfTalent 40% 41% 31% 37% 35% Employment Growth Dubai by Country // 11% 10% 11% 8% 9 Net percentage of firms which increased 2010 2011 2012 2013 16% 10 headcount 16% 17% 20% * * Based on on 130,000 130,000 vacancies vacancies advertised advertised on GulfTalent.com on website over the specified period. 23 GulfTalent.com over the specified period. 18% 19% Saudi Source Arabia : GulfTalent 20% 72% 20% 17% 17 Source : GulfTalent 61% 18% 22% 14% (Ex: Dubai) Employment growth graph Healthcare and education expanding Healthcare has recently been Dubai the fastest growing sector across the region, with 82% of firms increasing headcount in, followed 0% N/A* 22% by education at 80%. Growing populations and * Insu cient data for Source: Based on 130,000 vacancies advertised on Source: government GulfTalent investment Survey of GulfTalent.com are HR Managers driving over the both specified sectors. period. Prevalenc online recruitment varies across the region. New regulations making health insurance mandatory on employers is also contributing to the sector s expansion. Worst performing has been the oil and gas Nationalisation sector, where Pressure only 34% on Employers of firms created new jobs and some have been in the process of downsizing. Nationalization chart Percentage of employers reporting nationalisation key human resource challenge in Employment Growth by by Sector Net % of firms which increased headcount in Net % of firms which increased headcount in 59% 31% 2010 Employment growth by sector Healthcare Education Media & Marketing Transport & Logistics Engineering Travel & Hospitality Oil & Gas 36% 34% 82% 80% 80% 28% 78% 77% 6% 37% 2011 55% 53% 35% 2012 40% 84% 2013 95% Retail & Consumer 72% Banking 63% 4 20 Source: Source: GulfTalent GulfTalent Survey Survey of HR of HR Managers Managers 4

Recruitment volume graphs Recruitment Volume by Location Percentage of vacancies advertised on GulfTalent // Nationalisation pressure 23% In their effort to create jobs for their 19% citizens, GCC 11% 16% 17% 20% governments continue to push companies to 22% replace (Ex: some Dubai) of their expatriate employees with nationals. Attracting and retaining nationals while 31% maintaining Dubai the mix of skills needed to operate their business remains a major challenge for 2010 10% 18% 18% 37% 2011 employers. The pressure is greatest in and, where almost all employers cited Source: Based on 130,000 vacancies advertised on GulfTalent.com over the specified period. Prevalence of online recruitment varies across the region. nationalisation as a key challenge. It remains the least in and the, where nationalisation targets are significantly lower and confined to certain sectors only, and are less strictly enforced. Nationalization chart 11% 8% 9% 16% 10% 20% 20% 35% 40% Nationalisation Pressure on on Employers Percentage of of employers reporting nationalisation as a key key human human resource resource challenge challenge in in 95% 84% 55% 53% 28% 6% Competition from India As the Indian economy continues to grow at a rapid pace and create attractive employment opportunities for its citizens, employers in the Gulf are finding it increasingly difficult to attract professionals from India, traditionally a major source of talent for them. With the newly elected Indian government embarking on massive economic reforms expected to lead to more job creation, the issue is likely to intensify. 14% 2012 17% 2013 17% 41% It is difficult to attract Indian talent. Nowadays they have ample opportunities back home, with good salaries. General Manager Saudi-based Engineering Firm Visa restrictions Governments in the GCC are increasingly restricting the choice of nationalities available for companies to employ. In particular, visa applications for nationals of countries facing tensions or civil war, such as Syria and Egypt, are frequently rejected or delayed. This is limiting the ability of employers to absorb the talent seeking to escape the conflict zones. We had a great candidate from Syria but his visa was rejected and we lost him. HR Manager -based Construction Firm Employment & Salary Trends in the Gulf 5

Mobility attracts most expatriates The continues to maintain its status as the most attractive location in the Gulf for expatriates. Over 60% of professionals surveyed chose the as the place where they would like to work. Furthermore, 88% of expatriates already residing in the country expressed a desire to remain there, the highest retention rate among all GCC countries. The country s popularity stems from attractive employment opportunities, excellent infrastructure and relatively liberal social norms. Attraction of Expatriates % Attraction of GCC-based of Expatriates expats outside each country who wish % of to GCC-based relocate into expats it outside each country who wish to relocate into it 60% 40% 20% 0% 2009 2010 2011 2012 2013 Source: GulfTalent Survey Source: GulfTalent Survey popular, but retention low remains the second most popular destination for expatriates, though its popularity has declined sharply since its peak in 2010 when it was chosen to host the World Cup. The country also has one of the lowest retention rates, as the high cost of living and the ban on expatriates switching jobs prompt many to leave. Retention of of Expatriates Percentage of expatriates within country who wish to remain remain there there Percentage of expatriates within country who wish to 30% Source: Source: GulfTalent GulfTalent Survey Survey ban drives expats away recently introduced restrictions on expatriates changing employment. While helping employers retain staff, it is driving some expats to seek opportunities elsewhere in the Gulf. As a result, the country s retention rate has fallen to the lowest in the region. Expatriate resignations have gone down in our company, but anyone who is resigning now is leaving the country. HR Manager 55% 50% 48% 61% -based Multinational 88% 2013 88% 60% 49% 45% 43% 47% 6

Salaries Pay rises accelerating During, Gulf salaries rose at their highest average rate since the financial crisis and they are forecast to increase at an even higher rate during 2015. This is largely driven by stable economic growth, competition for local and expatriate talent, rising cost of living in some countries, and government measures such as pay rises for nationals and raising the level of minimum wage. GCC GCC Average Salary Increase 2007-2015 2007-2015 11.4% 9.0% 6.2% 6.1% 6.7% 6.9% 6.2% 5.9% 5.5% 2007 2008 2009 2010 2011 2012 2013 2015* * Forecast * Forecast Source: GulfTalent Surveys Source: GulfTalent Survey tops salary rises Private Sector Salary Increase Increase by Country by Country 2013 7.6% 7.4% 7.5% 6.7% 6.5% 5.6% 6.2% 5.3% 5.9% 4.0% 5.7% 5.4% Source: GulfTalent Survey Source: GulfTalent Survey Construction tops pay rises Salary Among Increase sectors, by construction Job Category firms saw the highest %, -2015 pay rises during, as governments across HR the region continued their massive investment in Engineering infrastructure projects. IT Healthcare and education, despite their rapid Finance expansion, continued to see some of the lowest Sales pay rises. Banking also saw lower than average Admin pay Marketing rises. 6.1% 5.9% 7.3% 7.1% 6.7% rabia hrain uwait During, had the region s highest salary increase, averaging 7.6%. In the aftermath Sector Salary Increase by Country of the Arab spring, the country has witnessed the emergence of powerful trade unions embarking 7.6% 7.4% on collective bargaining with employers on a 7.5% 6.7% scale never previously seen in the Gulf. 6.5% 2013 5.6% saw the 6.2% second 5.3% highest average salary increase, as 5.9% competition 4.0% to attract and retain Saudi talent 5.7% drove up wages. 5.4% : GulfTalent Survey Salary Source: Increase GulfTalent by Survey Industry Percentage, Salary Increase by Industry Percentage, -2015 Construction Telecoms & IT Logistics Retail Oil & Gas Real Estate Healthcare Banking Hospitality Education Source: GulfTalent Survey Source: GulfTalent Survey 7.8% 7.3% 7.2% 5.8% 5.6% 5.1% 5.1% 5.0% Increase by Job Category -2015 HR ring IT nce 7.3% 7.1% Change in Value of Gulf Currencies (Pegged to USD) -2015, indexed to Jan 1.3 vs. Euro 1.2 vs. British Employment & Salary Trends Pound in the Gulf 1.1 7

Sector Salary Increase by Country 2013 Private Sector Salary Increase 7.6% by Country 7.4% rabia 7.5% 6.7% 2013 6.5% High pay rises for HR 5.6% 7.6% 7.4% 6.2% 5.3% 7.5% 6.7% Among job categories, HR professionals enjoyed hrain 5.9% 4.0% 6.5% 5.6% the highest pay rises, signaling the return of HR to uwait 5.7% 5.4% 6.2% 5.3% prominence as companies seek to expand their : GulfTalent Survey talent base. 5.9% 5.7% 4.0% 5.4% Marketing Source: GulfTalent professionals Survey surveyed have reported the lowest average pay rises, possibly as a result Increase of by the Job shift Category to digital, reducing companies need to -2015 invest in traditional media and marketing. HR Salary Increase by Job Category Salary Increase by Job Category 7.3% %, -2015 %, ring 7.1% IT HR 7.3% nce Engineering 7.1% ales IT 6.7% min Finance 6.1% ting Sales 5.9% 6.7% Admin 6.1% e: GulfTalent Survey Marketing 5.9% Source: GulfTalent GulfTalent Survey Survey Salary Increase by Industry Percentage, -2015 Construction Salary Increase by Industry Telecoms & Percentage, IT -2015 7.8% 7.3% Logistics 7.2% Construction Retail 7.8% Strong dollar Telecoms & IT Oil & Gas 7.3% Logistics 7.2% Real Estate 5.8% Pegged to the US dollar, Retail Gulf currencies have Healthcare 5.6% risen in value over Oil the & Gas past year against several Banking 5.1% major currencies. Real This Estate has helped increase the 5.8% Hospitality 5.1% value of Gulf salaries Healthcare for expatriates, particularly 5.6% Education 5.0% those sending a significant Banking 5.1% share of their income Source: GulfTalent Hospitality Survey 5.1% back home in remittances. Education 5.0% Change in in Value Value of of Gulf Gulf Currencies Currencies (Pegged (Pegged to to USD) Source: GulfTalent Survey -2015, USD) -2015, indexed indexed to Jan to Jan 1.3 vs. Euro Change in Value of Gulf Currencies (Pegged to 1.2 USD) -2015, indexed to Jan 1.3 vs. British vs. Euro Pound 1.1 1.2 vs. British Pound 1 1.1 vs. Philippine Peso vs. Indian Rupee 0.9 1 vs. 2015 Philippine Peso Source: OANDA vs. Indian Rupee Source: OANDA 0.9 2015 Source: OANDA 8

2015 Outlook Rising salaries Salaries across the region are forecast to rise in 2015 at an average rate of 6.9%, compared to 6.7% in the previous year. is expected to see the highest average pay increase at 8.3%, driven by rising cost of living and the need to attract talent to the country. Employers in, under pressure from an increasingly unionised workforce, plan to award the second highest average pay rise at 7.2%. This is followed by Saudi Arabia and the at 7.1%. Expected Average Pay Pay Rise Rise %, 2015 Forecast %, 2015 Forecast 2015 Forecast 8.3% 6.5% 7.2% 7.6% 7.1% 7.5% 7.1% 6.2% 7.0% 5.9% 5.0% 5.7% Source: GulfTalent Surveys Source: GulfTalent Surveys Construction tops pay rises Expected Average Pay Rise by sector Expected Average Pay Rise by Sector %, 2015 Forecast %, 2015 Forecast 2015 Forecast Construction 10.0% 7.8% Logistics 7.7% 7.2% Retail Healthcare 6.3% 5.6% Real Estate 6.2% 7.3% Telecoms & IT 5.9% Education 5.8% 5.0% Banking 5.6% 5.1% Hospitality 5.5% 5.1% Oil & Gas 5.4% Employment Surveys Growth of HR Managers by Country Source: GulfTalent Net percentage Surveys of firms of HR increasing managers headcount 2015 Forecast Moderate hiring activity Employers in most GCC countries reported plans 49% to create new jobs in 2015, though mostly at a 47% lower rate than the previous year. The highest headcount increase reported is for with 66% of firms reporting an intent to increase headcount in 2015, followed by where the figure was 53%. The lowest expectations of headcount increase were for and. 53% * Insu cient data for 66% 72% 61% 59% N/A* 22% ected Average Across the Pay region, Rise the construction sector is 015 Forecast di Arabia expected to offer the highest average pay rise at 10%, as employers compete for talent to deliver large-scale infrastructure projects. Not surprisingly, the oil and gas sector is expected to have the lowest average pay rise, with slower growth and job losses in the sector around the world shifting the supply-demand balance in favour of employers. urce: GulfTalent Surveys 2015 Forecast 5.0% 7.2% 7.1% 7.1% 7.0% 8.3% 6.5% 7.6% 7.5% 6.2% 5.9% 5.7% Employment Growth by by Country Net percentage of firms increasing headcount Net percentage of firms increasing headcount 2015 Forecast 66% 53% 49% 47% * Insu cient data for * Insufficient data for 72% 61% 59% N/A* 22% Employment & Salary Trends in the Gulf 9

Expected Average Pay Rise %, 2015 Forecast Healthcare tops hiring The healthcare sector has the highest forecast for headcount increase in 2015 with 79% of firms expecting to hire more talent. Oil and Gas and Source: GulfTalent Surveys Telecom/IT sectors reported the lowest forecast, with only around one-third of firms planning expansion. Employment Growth by by Sector Sector Net Net percentage of of firms firms increasing headcount Oil uncertainty 2015 Forecast 5.0% 7.1% 7.1% 7.0% The impact of the oil price slump has so far been limited to some project cuts in and, with most governments using their reserves to maintain spending. If the price recovers by the end of the year, as some analysts expect, there is unlikely to be any major impact on the regional economy. However, if prices persist at current levels into 2016, governments will inevitably feel the need to reduce spending which will feed through to the rest of the economy and likely reduce employment opportunities. The possibility of a recession cannot be ruled out. 11.0% 10.2% Employment growth by industry headcount Healthcare Real Estate Retail Hospitality Construction Banking Logistics Oil & Gas Telecom & IT 2015 Forecast 28% 37% 54% 54% 53% 63% 79% 77% 71% 63% 50% 75% 74% 62% 33% 70% 21% 24% 7.6% 6.5% 7.5% 6.2% 5.9% 5.7% Oil price chart Oil Oil Price price Needed to to Balance Balance Budget Budget USD USD Source: IMF Source: IMF 47% Budget April 2015 price Budget surplus = $60 deficit 54 60 104 Oil price Needed to Balance Budget USD KSA 106 Indian economic growth The Indian economy, already fast growing, has received a major boost from plunging crude oil prices as well as the economic reforms planned by the newly elected government. As a result, it is widely expected to have the fastest growth rate of any major economy, outpacing China s growth for the first time since 1999. This is likely to make it even tougher than before for Gulf employers to attract professionals from India, putting further Salary rise forecast 77 upward pressure on salaries. Salary Rise Forecast 2015 Salary % Rise Forecast 2015 % 10.6% Employment Growth by Country Net percentage of firms increasing headcount 2015 Forecast 66% Oil price chart KSA Source: IMF 8.0% Budget surplus 6.9% Source: Hay Group, Aon Hewitt, GulfTalent 53% 49% April 2015 price = $56 54 60 77 125 2.8% 2.5% India China GCC US UK 104 106 Budget deficit 125 30% 70% 57% 61% 86% 43% 10

Country Highlights The Saudisation drive continues under the Nitaqat system, with employers receiving benefits and penalties based on the Saudistion level achieved in their workforce Return of foreign-educated Saudis to the Kingdom is providing a fresh pool of talent A new online system, Abshir, has radically simplified visa application and processing Visa restrictions on nationals from war-torn countries have made it difficult to source talent from these countries Mandatory health insurance is forcing all firms to extend this benefit to employees Increasing cost of living, particularly housing, a growing concern for residents and their employers Construction sector is expanding, with many government infrastructure projects finally starting in preparation for the World Cup Under pressure from international media, the government has increased enforcement of employee rights, and has launched a Wage Protection System, similar to the Rise in real estate prices a growing concern Increasing cost of living is making it difficult for employees to manage expenses. The government has cut its budget in response to falling oil prices, likely to lead to some slowdown in the economy Visa restrictions on certain nationalities are pushing employers to explore alternative sources of talent Huge pressure on employers to hire nationals, including at senior level Growing trade union activity forcing employers to offer higher salaries Significant cuts in government spending, particularly on oil-related projects New restrictions on expats, such as limits on switching jobs, is leading to an exodus of expats to the rest of the Gulf Stringent implementation of nationalisation policy with penalties for non-compliant employers Cuts in government spending due to the slump in oil revenues Minimum wage introduced for is in private sector, subsidised by the government Employment & Salary Trends in the Gulf 11

Appendix: Useful Information Salary Rise by Country (Percentage rise in Base Salary) Country 2013 6.7% 5.4% 5.6% 7.4% 4.0% 5.3% 7.5% 5.7% 6.5% 7.6% 5.9% 6.2% 2015* 7.1% 5.0% 8.3% 7.2% 7.0% 7.1% Economic Growth (Percentage real GDP change) Country 2013 3.7% 2.3% 5.5% 4.2% 3.9% 4.3% 4.1% 2.2% 6.1% 3.9% 3.6% 4.5% 2015* 4.2% 2.0% 6.3% 3.8% 3.2% 4.3% Inflation Country 2013 3.7% 2.8% 3.1% 1.3% 3.2% 1.1% 2.7% 2.9% 3.0% 1.0% 2.7% 2.3% 2015* 2.6% 2.4% 3.5% 2.3% 1.9% 2.1% Population (millions) Country 2015* 30.6 4.2 2.3 4.1 1.4 8.9 * Forecast Source: Economist Intelligence Unit, GulfTalent Surveys 12

Research Methodology This research report was based on GulfTalent s survey of 22,000 professionals employed by large and medium sized firms in the GCC, a survey of 600 executives and human resource managers, interviews with top management of a mix of private sector local and international companies, as well as review of macroeconomic sources, including the World Bank, International Monetary Fund, and the Economist Intelligence Unit. All historical pay data included in the report is based on the information provided by employees through an online English-language questionnaire, suitably screened and statistically analysed to arrive at the preceding results. Respondents were aged between 22-60 years old and earned an annual income ranging from US$ 12,000 to US$ 200,000. Salary increases were measured for employees in ongoing employment only, and excluded those who changed employment during the period. Salary forecasts are based on estimates provided by human resources managers. The survey was conducted during the period December to April 2015. Feedback, comments and queries regarding this report to be sent to research@gulftalent.com Disclaimer & Copyright This document should be used for information purposes only. GulfTalent makes no claims or warranties regarding the accuracy or completeness of the information provided, and accepts no liability for any use made thereof. The recipient is solely responsible for the use of the information contained herein. GulfTalent 2015. All rights reserved. Employment & Salary Trends in the Gulf 13

About GulfTalent GulfTalent is the leading online recruitment portal in the Middle East, covering all sectors and job categories. It is used by over 5 million professionals across the region for finding top career opportunities. It is also the primary online recruitment channel for over 6,000 companies, providing them access to both local and expatriate talent. Services for professionals Register for weekly job alerts Find jobs with top employers Find professional training courses Access information on salaries and trends in the job market Services for Employers Find top local and expatriate talent across all industries Run targeted recruitment campaigns Stay up-to-date with market trends Contact Details www.gulftalent.com +971 4 278 5200 14

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