Salaries in Saudi Arabia rise 4.5% in 2015

Wages have increased at a rate well above inflation despite volatility of oil prices

Salaries across the Kingdom have increased by an average of 4.5% in 2015.
Salaries across the Kingdom have increased by an average of 4.5% in 2015.

Salaries in Saudi Arabia have increased at a rate well above inflation, despite volatility of oil prices and global markets, latest data from global management consultancy Hay Group reveals.

Wages across the Kingdom have increased by an average of 4.5% in 2015 – marginally below the rate of 5%, which had been forecast last year.

Hay Group’s regional manager for Services, Wendell D’Cunha said: “With inflation at 2.6%, these increases represent a growth 1.9% in employees’ real spending power.”

In good news for workers, the highest increases have been seen by lower level employees with an average of 5.7%, the survey found.

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

Despite the economic uncertainty caused by falling oil prices and the poor performance of global markets, businesses are forecasting that salaries will increase by approximately 5% again in 2016.

Another interesting finding from the survey was that women, who comprised 5% of the research, are paid an average of 10% more than the general industry average.

D’Cunha explained: “When looking at the data, it appears that women are paid a higher than average wage. 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. 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.”

On average senior management employees were the only ones who received bonuses that were above target. As a percentage of basic salary, companies in the banking and retail sectors paid the highest bonuses.

D’Cunha said: “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.”

“Over 50% of employees surveyed have stayed with their current company for more than five years. However organisations in some sectors are finding it difficult to retain their staff. In the insurance sector turnover was approximately 40 per cent in 2015 whilst in retail the turnover was approximately 25 per cent. Nearly 17% of the workforce has spent less than a year with their organisation,” said D’Cunha.

D’Cunha concluded: “Falling oil prices and global markets are causing some uncertainty in the market. In these times, businesses concentrate their compensation spend on high performing employees whilst and below-average performing workers will receive little or no increase. 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.”

The findings were drawn from Hay Group’s annual Compensation and Benefits Report for Saudi Arabia, which measures salary payments made by 482 companies, representing 430,000 employees in the Kingdom.

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