Dubai: Companies across the GCC region are predicting an average salary increase of 5.5 per cent in 2014 — a figure in line with forecasts made for 2013 and 2012, both pegged at 5.4 per cent. This indicates a continued confidence in the economic stability of the region and an increasingly resilient business environment.
These are the latest figures from Aon Hewitt, the global talent, retirement and health solutions business of Aon Plc. The figures were released as part of its annual Global Salary Increase Survey 2013. Based on data from a robust comparative group of over 500 organisations from all industry sectors in the region, the report offers a unique snapshot of salary increase trends which, in turn, enables organisations to benchmark their forecasts with the market in order to remain competitive.
Among the participating GCC organisations, Saudi Arabia-based companies gave the highest salary increase projection for 2014 at six per cent. This is a slight increase on last year's 5.8 per cent predicted raise and comes at a time when the kingdom's economy is growing, with economists forecasting a growth rate of 5.3 per cent for 2013.
Meanwhile, companies based in the UAE predicted the lowest salary increase at five per cent, which is in line with last year's predictions of 5.1 per cent — indicating stability.
Kuwait and Oman firms estimated a 5.6 per cent salary growth, similar to the 2013 predictions, while companies in Bahrain forecast 5.2 per cent — an increase on last year's 4.7 per cent projection.
Looking back to 2012 and comparing the predictions from the survey for 2013 (5.4 per cent) with actual increments awarded earlier this year (5.3 per cent), the survey sees good alignment, allowing employees to feel confident that the trend is set to continue into 2014.
When looking at the distribution of salary increases, it was analysed that there is a clear correlation between performance and salary increases.
Robert Richter, Compensation Survey manager, Aon Hewitt Middle East, said, "Whilst linking individual performance to pay is not uncommon, we advise employers to use annual bonus payments as the larger component for rewarding high performers.
"Salary increases typically take into consideration a number of other factors as well as performance, including inflation, to reflect promotions, and the need to ensure that employees at the same grade remain within a single pay band."