This presentation covers an overview of current ways of managing Compensation in the Gulf countries, with a focus on the UAE. I am planning to post soon a video version of this presentation.

1. BENCHMARKING LIFE
IN ABU DHABI
Sandrine Bardot - CompensationInsider

2. Agenda
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Compensation in the GCC
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Challenges of living and working in the GCC
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Workforce
Packages (cash)
Packages (benefits)
Packages (variable)
Economy and the environment
Cultural and HR considerations
Impact of the Arab Spring
© 2013

3. Compensation in the GCC workforce
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Composition of workforce :
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10%, max 15% are locals
Definition of “expat” and average life cycle in UAE < 3 years
Nationalisation quotas and challenges
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Demographics : local population is not enough
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Government pay higher than private sector in the UAE….
UAE Nationals in private sector ?
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3.62 million expatriates in Dubai vs 864,000 Nationals (estimated)
60% of Abu Dhabi locals are less than 24 years old (estimated)
Lack of family education
Productivity expectations
Expected speed to promotion
Ambiguity of role of expats : needed but…
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4. 4
Compensation in the GCC packages
© 2013
Source : Mercer global online training

5. Compensation in the GCC –
packages (cash)
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Allowances :
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Housing, transportation, utilities…
Education and annual tickets, considered as benefits or as compensation
Usually paid in cash (with potential exception for housing)
Move towards one allowance
Special allowances for UAE Nationals (children, social) and eligibility
for equivalent of airfare as well as all other allowances
Tax free (except US / green card holders)
Overall packages higher than in Europe… at least apparently
Low cost of living on some stuff (maid, driver, some services, car
and gas), expensive on others (quality housing, outside food & wine)
Transfer someone : don’t equalize or COLA-ize… go for local
market compensation anyway
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6. 6
Compensation in the GCC –
packages (benefits)
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Nationals get pension and free
social security
Expats get End of Service (around
1m basic pay per year of service),
medical (not legally mandated
everywhere), life and sometimes
disability, retirement
Strong sense of social hierarchy
with salaries or allowances
different by UAE Nationals / expats
or even sometimes more
differentiation
Low protection : minimal labour
laws, trade unions are illegal, 1
month notice period, “visa run” for
maintaining residence visa,
bounced cheques mean going to
jail…
© 2013

7. 7
Compensation in the GCC –
packages (variable)
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Due to cultural reasons, variable pay was not really related to
individual performance (saving face – bonuses look more like
even distribution of a pool or profit-sharing) even though
practice of Pay for Performance is growing.
On-target bonuses lower than in Europe.
Maximum payouts or stretch is also lower than in Europe.
Very few LTIPs (but increasing trend in Financial Services
due to international governance practices, especially KSA,
Kuwait)
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Foreigners usually can’t own stock/equity
LTIPs tend to be distributed in cash
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8. Living and working in the GCC economy
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Young nations - strong nationalism, sense of cultural threat (minority
in their own country)
Current level of economic development is a strange mixture : high
rises and crumbling buildings, labour camps out of sight, some
advanced infrastructures but no signs on roads and addresses….
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Economy built on cheap labourers :
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Construction workers, taxi drivers, maids, low-level service providers
without family, fly home every 2 years
NRIs, Philippinos, Sri Lankans… struggling to obtain minimum wage
Fixed currency peg and sending money back home
BUT there are tensions on educated NRIs as local home country
salaries rise in India : sustainability of model ?
Government subsidies for citizens
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9. 9
Living and working in the GCC economy
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Oil still here but moving away
Vision of local government – changing future sources of
income : Plan Abu Dhabi 2030 and
The Dubai Strategic Plan2015
Impact of Dubai crisis/debt vs Abu Dhabi
Increasing regional competition
Setting-up business :
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Capital ownership and FTZs
Indirect forms of taxes
Cost of labour : residence visa, work permit, ID card, alcohol
licence, driving licence registration, healthcare check up,
translation of documents…
© 2013

10. Living and working in the GCC culture
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Multicultural but not always mixing
OK to recruit a “female Western PA aged 28 to 35”
OK : speak English – lifestyle… (Saudi Arabia : in compounds) but…
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Career of spouse ?
Risk of social alcoholism
Think of how to reintegrate the expat back in home country
(cultural, standard of living, financial, use of experience)
Islamic countries :
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No visa for girlfriend, or children of single mother
Limited female possibility to sponsor husband
Impact of Ramadan
Male – female interactions
Regional Christians (mostly Orthodox) : definition of identity
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11. 11
Living and working in the GCC culture
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Low governance and tribal managerial style of
decision-making (top down, slow, majlis, tribal, face
saving), personal relations and connections, gift
giving…
No written culture, importance of relations for survival
in harsh conditions : TRUST (handshake > contract)
From HR standpoint :
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Un-readiness of market for value-added solutions
Compensation & Benefits is perceived same as personnel
administration
Need lot of education towards modern HR practices,
especially in small, local and government entities.
© 2013

12. Impact of the Arab Spring
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© 2013
Credit : University of Notre Dame OpenCourseWare, Arabic and
Middle East Studies

13. Impact of the Arab Spring
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A quick overview of islam :
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Concerned about terrorism risk in-country
Balance Iran / Saudi Arabia
Impact of First Gulf War
Impact of demographics and
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5 pillars
Sunni vs Shia vs Wahabbis….
Lack of educational infrastructures
Role of internet, globalisation and youth aspirations
Few private sector opportunities while not sustainable for governments to
provide jobs for all like in the past (eg : proposal pension after 15
years….)
Unemployment means no marriage / family + perceived failure =>
tension
Different countries, different situations
© 2013

14. Impact of the Arab Spring
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Short-term impact on compensation (as per ECA spot
survey, 2011) :
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some evacuations of expatriates and/or their families
suspended business trips.
Currently no long-term impacts on Compensation but :
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Pay levels locally have decreased for Nationals in Tunisia, Egypt
and more due to economic difficulties as large parts of GDP are
being lost,
Recruiting nationals from the Arab Spring countries is more
difficult in semi-government organisations of the GCC (fewer
visas approved by Immigration authorities)
© 2013

15. Resources from my blog
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http://compensationinsider.com/the-uae-40th-national-day-an
http://compensationinsider.com/pensions-landscape-europehttp://compensationinsider.com/an-update-on-the-project-onhttp://compensationinsider.com/a-view-on-emiratisation-from
And
the article I wrote on this topic for Compensation & Benefits R
, a Sage Journal (paying)
© 2013

16. Other free resources
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Crisis planning, an April 2011 article from ECA
International about having a plan for when crisis
strikes
Free report on employment and salary trends in the Gul
2012 from GulfTalent.com a recruitment agency in
the region.
Linking jobs and education in the Arab world, a still
valid April 2011 McKinsey Quarterly article
(requires free registration). If you like the article, it
is worth following the link in the article and access
the full report for free through their website
© 2013

17. Thank you !
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+971 566 172 864
Sandrine@Compensationinsider.com
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© 2013
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