In what indicates the income disparity in Qatar, global consulting firm Hay Group has found a 98% gap between the fixed pay of citizens and expatriates in 2011 and it has been rising steadily.
The consulting firm also said the recent decision to hike salaries of nationals by 60-120% in the government and public sector would not only fuel inflation but also increase the cost of labour and that pay in Qatar was on an average 20% more than what was offered in other Gulf countries.
“On average, there is now a 98% pay gap between the fixed pay of Qatari nationals and non-nationals,” Hay Group said in its annual report.
The report said the differential was 88% in 2010, 64% in 2009 and 27% in 2008.
Hay Group’s annual report on compensation and benefits analyses salary information of 41,000 employees from 117 organisations in Qatar comprising a wide spectrum of industry sectors. Oil and gas and financial sectors are highlighted in the report as those already implementing changes to their reward policies.
The decree (on 60-120% hike in salaries) would have a positive multiplier effect on the economy and demonstrated how the government was investing in its people but more spending and consumption would bring inflation, Harish Bhatia, manager of Reward Information Services at Hay Group, said.
“It will be interesting to see how supply and demand plays out in the labour market which will become more complex as a result,” he said.
Finding that the oil and gas sector pays 100% higher than the market average and financial services also offers above the market average; he said together, these sectors employ 75% of the Qatari nationals in the workforce and employers in these sectors face an immediate increase in payroll costs.
The decree was fuelled by an intention to distribute the wealth of the nation but private sector employers were concerned with how they would be able to compete with the government’s initiatives in attracting nationals into their workforce, Bhatia said.
Employers in the private sector would face a challenge in ensuring Qatari nationals played a part in the exciting phase of development that Qatar was in midst of, he added.
Hay Group expects that the private sector companies would also make some changes to reward packages for non-nationals to manage expectations.
“With higher pay, which will give rise to higher spending and consumption, we would expect the private sector to react. In addition to local market forces, a number of multi-nationals have to remain in-line with their global philosophy of pay equally regardless of nationality,” he said.
From a human resources perspective an across-the-board pay increase was entitlement driven, rather than performance driven, he said, adding “a sudden increase without differentiation based on performance may increase the cost of labour without the corresponding benefit to the organisation.”
On the wider implications of Qatar government’s decision to hike salaries for nationals, Bhatia said “elsewhere in the Gulf region we have seen governments awarding one-off bonus payments or subsidies in recognition of the peoples’ contribution to economic growth and Qatar is looking at a long-term commitment with this decree, which therefore requires long term commitment from organisations.”
(Source: Gulf Times)