GNcareers, from Gulf News

Most companies in GCC reluctant to adjust staff allowances

Most companies in GCC reluctant to adjust staff allowancesImage Credit: Supplied

Amid calls for relief from the pressure of rising living costs, many employers in the UAE are still reluctant to increase staff allowances this year, according to a new research.

In a survey conducted among companies in the Gulf Cooperation Council (GCC) countries, human resources (HR) managers and compensation and benefits personnel said they don't intend to increase the allowances of their employees this year.

The HR managers were asked if the compensation and benefits packages of their staff have been ''impacted by the increasing costs of housing and education'' in the region. Nearly half (45 per cent) said yes, while 20 per cent said they are either not sure or the matter is still under review.

The survey responses only suggest that many companies are not planning to change their allowances, according to a report by the HR Compensation and Benefits (C&B) Forum and HR Observer, which conducted the survey.

''[Companies] are wary of increasing these allowances because it is easy to end up in an ever increasing cost and employee expectation spiral, which will put pressure on reward budgets.''

A number of households saw their spending on rent and utilities increased last year and in the first part of 2015. According to Asteco's data, rents remained unchanged in most communities during the first three months of 2015, but some locations still witnessed increases of up to 16 per cent between the first quarter of 2014 and first quarter of 2015.

Cash allowances in the UAE, such as transportation and housing, can constitute up to 50 per cent of an employee's entire compensation package, with rates ranging between $20,000 and $53,000, according to Aon Hewitt.

The C&B survey also found that the uncertainty over the oil price is affecting the outlook for bonuses in the Gulf. The responses showed that, this year, a much higher percentage of companies are not sure what bonuses they will be paying this year in relation to 2014.

A small proportion of the companies (12.2 per cent), said this year's bonuses will be lower than last year, while 29.3 per cent said the bonuses will be the same as in 2014.

Almost the majority (45.5 per cent) of the companies, however, said they don't know yet what will happen to the bonus payments, an increase from 28.3 per cent last year.

''This could be due to uncertainty surrounding business performance especially with oil price volatility,'' Rob Sahi, conference director at Informa, formerly known as IIR Middle East, told Gulf News.

''Bonus payments are usually linked to not only individual performance but business performance overall and a lot of companies are cautious as they track performance in the market.'' Informa Middle East and Africa will be hosting the 19th Annual Compensation and Benefits Forum in June.

The report also said that retaining and attracting top talent are the main challenges for companies today. GCC companies are having difficulty recruiting and keeping top performers as businesses face uncertain times.

Employers are finding ways to keep their top employees by improving ''total rewards'' instead of just increasing compensation packages. Things like work/life balance, recognition, wellness, benefits and development are now being focused on.

''While the GCC labour markets are becoming more competitive, finding top talent is like finding needles in a haystack. When businesses face uncertain times, there is more pressure on compensation and rewards to ensure they keep their top people and not lose them to competitors or to different markets as staff here are quite mobile,'' said Sahi.

''This is why the concept of ‘total rewards' that does not rely heavily on just monetary compensation [pay and allowance] are more relevant now than ever.''

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Source: Cleofe Maceda, Senior Web Reporter,