UAE, Saudi to see tepid salary gains 2018: report
Some job creation in projected in new sectors such as privatisation, digital banking, fintech and Blockchain all becoming potentially important growth sectors
The UAE is likely to witness some slight improvements in salary levels and in the activity level for new jobs, while the same is expected to remain flat in Saudi Arabia for 2018, according to the latest Cooper Fitch's Salary Guides.
UAE
Cooper Fitch estimated GDP growth of approximately 3.4 per cent in 2018 (according to IMF forecasts) across the country. With the predicted outlook for oil prices of approximately $55 per barrel as per the S&P Global rating made in November 2017, only slight improvements in salary and new jobs is seen, it said.
This follows the back of a more lacklustre than expected finish in 2017, which was a continuation of the 2016 trend. “The key sectors of banking had a much-improved year last year in line with what we had predicted for it, but 2018 still looks very uncertain, with a considerable number of mergers planned for the next 12 months,” the report said.
The energy sector is starting to see some very slight "green shoots" with some key hires being made, but it is still running on a minus number when it comes to salary levels. The number of new jobs coming to market was slightly higher than that of 2016 (by 1-2 per cent).
The economic outlook for the UAE for 2018 shows some good signs of growth, in terms of the creation of new opportunities and increased headcount for the year ahead, within the following areas: sales, advisory, legal, strategy, tax, IT, and digital.
Some job creation in projected in new sectors such as privatisation, digital banking, fintech and Blockchain all becoming potentially important growth sectors, particularly in Dubai.
Other areas such as supply chain and manufacturing have had a good 2018, with more high-end job creation that occurred last year and the same plan for the year ahead. The introduction of VAT in the UAE and across the GCC is forecasted to create over 9,000 new jobs across the Gulf.
Salaries will remain very flat in the property & construction, healthcare, and education industries, the analysis said.
Cooper Fitch are predicting that salaries will rise to between 2-3 per cent of current levels, dependent on predicted GDP and commodity prices as outlined. There are significant differences in how certain sectors are forecasting recruitment activity with certain sectors likely to perform better than others, leading to corresponding salary performance.
Saudi Arabia
Cooper Fitch estimated GDP growth of over 2-3 per cent in line with Bloomberg's figures but takes into account references that the IMF report in October of 2017 is forecasting reduced growth of between 1 and 2 per cent across the Kingdom.
With the prediction for the outlook for oil prices being at around S55 per barrel (S&P raises 2018 Brent oil price forecast), Cooper Fitch sees salary levels and new jobs in the Kingdom remaining quite flat. This is off the back of a flat year, albeit a slightly better-than-expected finish to 2017, but with a reduced GDP of 0-1 per cent.
Economically, 2017 was a flat year overall in Saudi. This was reflected in lower-than-expected recruitment activity, with slower job creation and consolidation in some sectors, so jobs and salaries have either reduced or remained flat in most sectors.
The economy overall was sluggish, and not helped by poor consumer confidence and lower commodity prices. The number of new jobs coming to market was similar to that in 2016, translating into a softening in salaries for the year as a whole. The outlook for the economy, new jobs, and salaries for Saudi is improving, and market sentiment looks reasonably positive.
“Saudi is in a period of rapid transformation, both socially and economically. We see growth in terms of the creation of new headcounts for the year ahead, with new hires for jobs in consultancies, digital, advisory, legal jobs, strategy, and tax, along with big infrastructure projects playing a big part of the recruitment drive for 2018,” the Cooper Fitch report said.
The single biggest growth factor is the privatisation of certain government-owned or -run entities in Saudi. The requirement for "privatization" and "public-private partnership expert" will be a key driver. “Energy and oil & gas show good signs of recovery, with what will hopefully be a reasonable level of job creation and headcount approval for 2018. The imminent introduction of VAT in Saudi for the year ahead will be another key driver of new jobs creation,” it said.
Cooper Fitch are predicting that salaries will remain flat, staying at current levels dependent on predicted GDP and commodity prices as outlined. There are significant differences in how certain sectors are forecasting recruitment activity, with certain sectors likely to perform better than others, leading to corresponding salary performance.
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