Introduction
• Employment and job creation remain the hottest issues in the Middle East, including in the six countries of the Gulf Cooperation Council (GCC). • This research report, produced by online recruiting firm GulfTalent.com, summarises the status of the employment market and forecasts key trends to be expected during 2012. • “Employment and Salary Trends in the Gulf” is published annually since 2005 and is the premier publication on employment trends in the Gulf region.
© GulfTalent.com 2012. All rights reserved.
1
This report is based on in-depth research from a wide array of sources Research Methodology Source
Online Survey of Candidates
Participants
Selection Criteria • Professionals employed by 3,000 largest corporations in the GCC
35,000 professionals
• Aged 22-60 years • Earning an annual income in the range USD 12,000 - USD 200,000
Online Survey of Employers
2,100 Executives & HR Managers
• Employing 50 to 20,000 staff • Across all major industries • Mix of private sector local and international companies
Interviews with Top Managers
60 Senior Executives
• Across all major industries • Based in the 6 GCC countries (Saudi Arabia, Qatar, Kuwait, Bahrain, Oman, UAE)
News & Research
• Relevant reports from the press and news sources across the region • Macro-economic sources
2
Contents
•
Economic & Political Background.................................……….. 4
•
Nationalisation........................................................................... 9
•
Recruitment ..............................................................................13
•
Mobility.......................................................................................19
•
Salaries & Cost of Living........................................................... 25
•
2012 Forecast...........................................................................32
•
Appendix – Useful Information..................................................37
3
Economic & Political Background
4
Gulf countries are experiencing high economic growth compared to the rest of the world, thanks to high oil prices and government spending Economic Growth 2008-2012
Crude Oil Price USD per Barrel
GCC Economic Growth World Economic Growth
120 100 6.5%
5.2%
4.7%
4.2% 4.1% 2.7% 1.4%
2.2%
0.0%
80 60 40 20
-2.3% 2008
2009
0 2010
Source: Economist Intelligence Unit
2011
2012 Forecast
2009
2010
2011
2012
Source: Dow Jones & Company
5
During 2011, Qatar and Saudi Arabia led economic growth in the Gulf, while Bahrain saw the region’s lowest growth Gulf Economic Overview 2011 GDP Growth
Key Factors Affecting Growth
17.6%
Qatar 7.0%
Saudi Arabia 4.7%
Oman
4.4%
Kuwait
UAE
Bahrain
3.3%
2.2%
Size of Economy ($bn)
Completion of gas projects, Government spending on infrastructure, 2022 World Cup preparation
179
High oil price, Huge government spending programme
588
Government spending, some limited unrest
67
High oil price, Government spending, US troops withdrawal from Iraq
163
High oil price, Tourism boost following Arab spring, Dubai debt restructuring, Financial sector weakness
358
Domestic unrest
26
Source: Economist Intelligence Unit, GulfTalent.com Interviews
6
2011 was a year of political turmoil in the Arab world Arab World – Key Popular Movements 2011
Syria
Tunisia
Lebanon’
Iraq Bahrain
Jordan
Libya
Kuwait
Egypt
Qatar
UAE
Saudi Arabia Oman Revolution / Overthrow of Government Public Demonstrations
Yemen
On-going armed conflict
7
GCC governments have undertaken massive wealth distribution measures among their citizens Pay Rise for Nationals in Public Sector 2011
Qatar
60-120%
UAE
35-100%
Bahrain
up to 37.5%
Kuwait
25%
Saudi Arabia
Oman
Other Government Measures 2011
15% 50-100 Omani Rial per month
Saudi Arabia − $130bn subsidy programme − SAR 2,000 per month unemployment benefit − Minimum wage raised to SAR 3,000 − Large scale housing programme Oman - 50,000 new jobs in public sector - Minimum wage increased to OMR 200 - OMR 150 per month unemployment benefit Bahrain - One-off grant of BHD 1,000 per family - Minimum wage increased to BHD 402 Kuwait - One-off grant of KD 1,000 per citizen UAE - $2.7bn fund to provide loan assistance for low income citizens
Source: News reports
8
Nationalisation
9
Job creation for citizens through nationalisation of expatriate jobs continues to be a top priority for most GCC governments Overview of Nationalisation in Private Sector Pressure on Employers % of employers reporting nationalisation as a key human resource challenge
Oman
82%
Saudi Arabia
78%
Bahrain
54%
38%
Kuwait
UAE Qatar
Average Nationalisation Rate Nationals employed in private sector as % of total private sector employment (2011)
28%
17%
Increase in Nationalisation % of companies reporting an increase in their nationalisation rate during 2011
14%
36%
10%
59%
20%
17%
5%
27%
7%
17%
1%
15%
Source: GulfTalent.com Survey of HR Managers, GCC Labour Ministries
10
GCC governments have historically used a range of measures to increase employment of nationals in the private sector GCC Nationalisation – Common Government Strategies
Targets & Limits
• Targets by sector (e.g. Banks, Oil and Gas, etc.)
Support & Facilitation
Incentives & Enforcement
• Employment fund (subsidising
• Withholding visas for expat hires
wages of newly employed nationals) • Tax on employers for each
• Targets by job functions (e.g. HR)
• Free training for nationals
• Job centers – putting unemployed
expatriate employee
• Public praise / reprimand
in touch with employers
Source: Press reports, HR interviews
11
More innovative approaches are being tried in some countries, introducing elements of choice, competition and commercial incentive
Recent Nationalisation Initiatives
Saudisation
Emiratisation
(‘Nitaqat’ – introduced June 2011)
(Introduced December 2010)
• Companies within each sector are ranked by their Saudization rate and grouped into 3 categories. • Companies in lowest ranks (‘red zone’ ) would face difficulties in applying for new visas or even renewing existing visas.
• Companies are placed into one of 3 categories according to their Emiratisation level, diversity of nationalities and compliance with proposed minimum wage levels. • Companies in lower categories pay significantly higher government fees for their visa requirements.
• Companies in highest ranks (‘green zone’) would be able to hire expats from companies in the ‘red zone’ without acquiring ‘no objection certificates’ (NOC). • Zone boundaries vary by industry, and are determined based on the average of each peer group.
12
Recruitment
13
Saudi Arabia leads job creation in the Gulf, while Bahrain lags the group with almost no expansion reported Employment by Country Net % of firms which increased headcount 2011
2010
62%
Saudi Arabia
56%
Oman
55%
57%
Kuwait
51%
25%
Qatar
51%
45%
37%
UAE
Bahrain
8%
Observations • Almost all Gulf countries had higher rates of job creation compared to 2010. • Saudi Arabia had the highest rate of job creation thanks to its strong economic growth and high government spending. • Bahrain had almost no job creation in 2011 following severe political tensions in the country.
22%
23%
• UAE had a significant rise in job creation, but it was still much lower than most Gulf countries.
Source: GulfTalent.com Survey of HR Managers
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Dubai’s share of regional recruitment activity has started to increase after two years of slowdown – due to a combination of jobs growth and staff turnover Recruitment Volume by Location % of vacancies advertised on GulfTalent.com * Oman Bahrain
2% 6%
Kuwait
9%
4% 4% 6%
Qatar
8%
14%
Saudi Arabia
14%
UAE (excluding Dubai)
3% 4% 4%
3% 3% 4%
16%
17%
20%
20%
18%
21%
22%
31%
31%
2009
2010
13% 18%
Dubai
48%
2008
37%
2011
* Based on 68,000 vacancies advertised by employers and recruitment agencies on GulfTalent.com website over the specified period Note: Internet penetration and prevalence of online recruitment varies across the countries Source: GulfTalent.com
15
Oil & gas, healthcare and retail sectors are enjoying the largest headcount expansion, while banking and construction fare the worst Employment by Sector Net % of firms which increased headcount in 2011
63%
Oil & Gas Healthcare
61%
Retail
60% 50%
Telecoms/IT
46%
Engineering
43%
Travel & Hospitality
41%
Transport & Logistics Real Estate
33%
Banking
28%
Construction
27%
Observations
• Oil & Gas had the highest rate of employment due to expansion plans following two years of high oil price. • Healthcare also had high employment for a second year mainly due to continued government investment. • Retail continued to enjoy high growth on the back of higher consumer spending and net disposable income. • Banking had one of the lowest growth rates, with some banks announcing fresh rounds of redundancies, following increased worries about the Euro crisis. • Construction continued to have a low employment growth rate due to completion of old projects and lack of new ones.
Source: GulfTalent.com Survey of HR Managers
16
With Western countries facing high unemployment and low pay rises, Gulf employers are finding hiring Western nationals easier than Asian candidates
Unemployment Rate in Western Countries 2008-2012
Private Sector Pay Increase – Global Comparison % 2011
11%
12.6%
India France
10%
Philippines 9%
6.7%
UK
8%
Canada
5.5%
GCC
7%
Australia
4.4%
6%
Australia UK
5% 4% 3% 2008
2009
2010
Source: Economist Intelligence Unit
2011
3.1%
US
2.7%
Canada
2.7%
Source: Aon Hewitt, Hay Group, GulfTalent.com
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The popular uprisings across the wider Middle East have had a mixed impact on attraction and retention of talent in the Gulf Impact of Arab Spring on Gulf Employment Key Trends
• Nationalisation targets: Government pressure on private sector to hire more nationals has intensified.
Employment of Nationals
• Competition for nationals: Pay hikes awarded by governments to public sector employees, which were partly prompted by the Arab Spring, has made it harder for the private sector to attract nationals.
• Availability of Arab expats: More Arab expatriates are available from countries which experienced political turmoil.
Expatriate Employment
• Visa restrictions: Some Gulf governments have made it more difficult to apply for employment visas for expats from troubled countries. • Western expats: Some employers are finding it difficult to attract Western candidates, as they perceive the region to be unsafe following the press coverage of the Arab spring. 18
Mobility
19
The UAE and Qatar remain prime destinations for expatriates, with Saudi Arabia in third place Attraction of Expatriates % of GCC-based expats outside the country who wish to relocate into it
Observations
• UAE has strengthened its position as the most popular destination among Gulf-based expatriates.
70% 60% UAE 50% 40%
Qatar
• Qatar, which was rapidly closing the attraction gap with the UAE, remains in second place and has lost some momentum, as sentiments about the UAE economy becomes more positive.
30% Saudi Arabia
20%
Oman Kuwait Bahrain
10% 0% 2008
2009
2010
2011
• Saudi Arabia remains in third place, with its attractiveness stable, following a sharp rise in popularity at the onset of the crisis. • Bahrain dropped from fourth place to the bottom, becoming the Gulf’s least attractive destination for expatriates, following political tensions in the country.
Source: GulfTalent.com Surveys
20
Dubai remains by far the region’s most attractive city for expatriates Ranking of Gulf Cities – By Attractiveness to Expatriates % of GCC-based expats outside the city who wish to relocate into it Overall 37%
Dubai 22%
Doha
20%
Abu Dhabi 7%
Jeddah 4%
Muscat
Western Expats
Asian Expats
Arab Expats
46%
35%
38%
21%
20%
25%
26%
20%
17%
3%
7%
9%
8%
4%
2%
Kuwait
3%
1%
4%
3%
Madina
3%
1%
3%
3%
Riyadh
3%
2%
3%
3%
Makkah
3%
0%
3%
2%
Dammam
2%
0%
2%
1%
Manama
2%
3%
2%
1%
Sharjah
2%
1%
2%
1%
Source: GulfTalent.com Survey
21
In terms of attractiveness to expatriates living within the country, the UAE once again retains the lead position Retention of Expatriates % of expats within the country who wish to remain there 2012
2011
81%
UAE
64%
Kuwait
72%
59%
Saudi Arabia
49%
50%
Qatar
49%
51%
Bahrain
Oman
46%
45%
50%
Observations
• UAE’s already high retention rate has increased further, due to a rebound in business confidence, declining rents and the country’s high level of political stability. • Kuwait benefits from the long-term nature of its expatriate population, with social and family ties formed over the years discouraging expats from leaving the country. • Qatar’s retention rate remains significantly lower than UAE mainly because of laws preventing expatriates from changing jobs.
50%
• Bahrain’s retention rate has dropped for a second year, following political tensions and slow economic growth in the country. Source: GulfTalent.com Survey
22
Abu Dhabi continues to serve as an employment hub for a portion of Dubai residents, while Bahrain’s role as a base for working in Saudi has taken a hit
Dubai-residents working in Abu Dhabi As % of all working professionals living in Dubai
5.4%
Bahrain-residents working in Saudi Arabia As % of all working professionals living in Bahrain
5.4%
2.2%
3.4% 1.0% 1.1%
2007
0.9%
1.3%
1.1%
1.1%
2008
2009
2010
2011
2007
2008
2009
2010
2011
Source: GulfTalent.com Surveys
23
Governments across the Gulf are continuing to encourage labour mobility within their countries, through easing NOC requirements * Domestic Labour Mobility Country
Labour Mobility
Recent Developments
Bahrain
NOC requirement abolished in 2009
Oman
NOC requirement abolished in 2007
UAE
NOC not required after completing 2 years (Jan. 2011). Already removed fully for free zones.
Kuwait
New sponsorship system plans to remove NOC requirement altogether, but not implemented yet
Saudi Arabia
NOC not required if previous employer below required nationalisation targets (June 2011)
Qatar
Most strict in the Gulf. NOC fully enforced. No indication of an imminent easing.
Guide to chart Full labour mobility (NOC not required) No labour mobility (NOC fully enforced)
* No Objection Certificate – issued to expatriate employees by their employer, giving consent to the expatriate being hired by another firm Source: Press reports, HR interviews
24
Salaries & Cost of Living
25
Average private sector salary increase in the Gulf has remained stable, but much lower than pre-recession levels.
GCC Average Salary Increase %, 2007- 2012
11.4% 9.0%
6.2%
6.1% 5.5%
2007
2008
2009
2010
2011
5.6%
2012 Forecast
Source: GulfTalent.com Surveys
26
During 2011, Oman enjoyed the highest average increase in pay, followed by Saudi Arabia and Qatar Private Sector Salary Increase by Country 2010
2011
6.5%
Oman
6.0%
Saudi Arabia
5.6%
Qatar
Kuwait
UAE
Bahrain
5.1%
4.9%
4.5%
6.4%
6.7%
6.8%
5.7%
5.2%
Observations
• Oman had the highest salary increase in the Gulf, in part driven by widespread strikes by Omani employees and the pay hike awarded in the public sector. • Saudi Arabia and Qatar continued to have high salary increases on the back of strong economic developments. • Bahrain had the lowest salary increase due to lower economic growth following the political unrest.
4.9%
Source: GulfTalent.com Survey
27
Average pay rise net of inflation, was highest in the UAE and Bahrain
Real Salary Increase by Country *
4.9%
Bahrain
4.0%
UAE
3.7%
Qatar
2.5%
Oman
Saudi Arabia
Kuwait
1.0%
0.4%
Salary Rise
Inflation
4.5%
-0.4%
4.9%
0.9%
5.6%
1.9%
6.5%
4.0%
6.0%
5.0%
5.1%
4.7%
Observations
• Despite having the lowest salary increases in the Gulf, Bahrain and UAE enjoyed the highest increases in real terms due to very low inflation rates. • Saudi Arabia and Kuwait had the lowest salary increases in the Gulf in real terms, due to relatively high inflation.
* Defined as nominal pay rise net of inflation rate Source: GulfTalent.com Survey, Economist Intelligence Unit
28
HR professionals enjoyed the highest pay rise, while Administration and Marketing had the lowest Salary Increase by Job Category %, 2011
Observations
HR
6.4%
IT
6.3%
Finance
Sales
Engineering
Admin
Marketing
5.5%
• HR had the highest salary increase for a second year, reflecting the rising profile and growing sophistication of the HR role, as well as leaner HR operations supported by fewer staff following the crisis. • IT had one of the highest increases last year, due to global shortage and on-going demand for IT professionals.
5.3%
5.3%
• Admin candidates continued to have one of the lowest increases, as companies continue to automate processes and seek staffing efficiencies.
4.9%
4.6%
Source: GulfTalent.com Survey
29
Among sectors, Healthcare and Retail offered the highest pay rises, while Real Estate had the lowest Salary Increase by Industry %, 2011
Observations
6.4%
Healthcare
6.2%
Retail & FMCG Telecoms & IT
5.7%
Oil & Gas
5.7%
Engineering
5.6% 5.4%
Construction
5.1%
Travel & Hospitality
Banking Real Estate
• Retail sector continued to have high salary increase in line with strong growth in the sector, generated by high consumer spending. • Banking sector continued to suffer for a third year, following a slow rate of recovery and fresh rounds of redundancies on the back of the European debt crisis.
5.0%
Transport & Logistics Education
• Healthcare had the highest salary increase, due to increased investments by GCC governments, specifically Saudi Arabia.
4.6% 4.5% 4.3%
Source: GulfTalent.com Survey
30
Cost of living has continued to rise in Saudi Arabia, Kuwait and Oman. In absolute terms, however, it remains low compared to UAE and Qatar Inflation %
Rent for Two-bedroom Apartment US$ per month, 2012* 2011
2010 1,930
Abu Dhabi 5.0%
Saudi Arabia
5.4%
1,650
Doha
1,590
Dubai 4.7%
Kuwait
4.0%
Oman
4.0% 3.2%
Muscat
1,000
Kuwait
960 910
Sharjah 1.9%
Qatar UAE Bahrain
-2.4%
840
Manama 0.9% -0.4%
0.9%
Riyadh Dammam
670
Jubail
670
Jeddah
670
2.0%
Khobar
Source: Economist Intelligence Unit
710
550
* Average figure. Wide variations based on location and quality Source: GulfTalent.com Survey
31
2012 Forecast
32
Gulf salary rises during 2012 are expected to be broadly in line with 2011 Expected Average Pay Rise %, 2012 Forecast 2012
6.4%
Qatar
6.2%
Saudi Arabia
5.6%
Oman
UAE
Kuwait
Bahrain
5.1%
4.9%
4.5%
2011
Observations
5.6%
• Gulf employers generally expect similar salary increases in 2012 compared to the previous year
6.0%
6.5%
• Qatar and Saudi Arabia are expected to have the highest increase in the Gulf and slightly higher than their 2011 levels, as companies expand to capitalise on the two countries’ strong economic growth
4.9%
5.1%
• Bahrain is once again expected to have the region’s lowest salary increase in 2012 due to a stagnant economy following domestic unrest in 2011.
4.5%
Source: GulfTalent.com Survey of HR Managers
33
Job creation is expected to be moderately higher in 2012, with Saudi Arabia continuing to lead Employment Growth by Country Net % of firms increasing headcounts 2012
2011
77%
Saudi Arabia
73%
Oman
68%
Kuwait
65%
Qatar
UAE
Bahrain
51%
42%
62%
Observations
• All Gulf economies are expected to have higher rates of job creation in 2012 compared to the previous year.
56%
51%
• Saudi Arabia is expected to continue to have the highest rate of job creation in the Gulf, thanks to high economic growth and government spending.
51%
37%
• Bahrain is expected to rebound partially from a stagnant job market in 2011, but will continue to have the region’s lowest rate of job creation.
8%
Source: GulfTalent.com Survey of HR Managers
34
Oil & gas, retail and healthcare will continue to dominate jobs growth, while banking and construction continue to have the lowest growth rates Employment Growth by Sector Net % of firms increasing headcounts 2012
2011
Oil & Gas
73%
63%
Retail
72%
60%
65%
Healthcare
61%
Telecoms & IT
63%
50%
Transport & Logistics
62%
41%
Travel & Hospitality
62%
43%
Engineering
58%
46%
Real Estate
57%
33%
Construction Banking
48% 46%
Source: GulfTalent.com Survey of HR Managers
Observations • Oil & Gas is expected to have the highest expansion in 2012 due to new projects in the sector. • Retail is expected to continue growing at a high rate due to higher net disposable income and consumer spending. • Banking is expected to have the lowest rate of job creation in 2012, due to continuing credit concerns and the Euro-zone financial crisis
27% 28%
35
A number of external uncertainties can impact the Gulf economy and labour market during 2012 Political & Economic Uncertainties
Economic Factors
Political Factors
• European debt crisis: Continuing bad news in Europe, including the possibility of a sovereign default, could lead to another global recession – impacting Gulf countries, particularly the UAE which is more exposed to global trade and tourism.
• Arab spring: Significant uncertainty remains over the outcome of the conflict in Syria, the kind of governments which are likely to emerge in place of those that have fallen, and the extent to which developments in the wider Arab world will impact Gulf countries.
• US Dollar: Given the Gulf countries’ peg to the US Dollar, any significant fluctuations in the value of the US Dollar against other currencies could impact Gulf employers’ ability to attract and retain expatriates – particularly from major source countries such as India.
• Iran tensions: A possible military conflict with Iran could have unpredictable consequences for the entire Middle East region including Gulf countries.
Source: Economist Intelligent Unit, GulfTalent.com Interviews
36
Appendix – Useful Information
37
Useful Information Salary Rise by Country % Rise in Base Salary Country
Economic Growth % Real GDP Change
2010
2011
2012 F†
Bahrain
4.9%
4.5%
4.5%
Kuwait
5.7%
5.1%
Oman
6.4%
Qatar
2010
2011
2012 F†
Bahrain
4.5%
2.2%
3.1%
4.9%
Kuwait
3.1%
4.4%
5.4%
6.5%
5.6%
Oman
5.0%
4.7%
4.5%
6.8%
5.6%
6.4%
Qatar
14.0%
17.6%
7.6%
Saudi Arabia
6.7%
6.0%
6.2%
Saudi Arabia
4.1%
7.0%
4.8%
UAE
5.2%
4.9%
5.1%
UAE
1.4%
3.3%
3.5%
Inflation Country
Country
Population (millions) 2010
2011
2012 F†
Country
2012
Bahrain
2.0%
-0.4%
2.2%
Bahrain
1.3
Kuwait
4.0%
4.7%
4.4%
Kuwait
3.9
Oman
3.2%
4.0%
3.7%
Oman
3.4
Qatar
-2.4%
1.9%
2.1%
Qatar
1.8
Saudi Arabia
5.4%
5.0%
4.3%
Saudi Arabia
28.9
UAE
0.9%
0.9%
2.1%
UAE
7.5
† Forecast Source: Economist Intelligence Unit, GulfTalent.com Surveys
38
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