Gulf Salaries Rise by 11.4% in Year to August on Labor Shortage

By Matthew Brown

Oct. 12 (Bloomberg) -- Salaries in the Arabian Gulf increased by an average 11.4 percent in the year to August, because of a shortage of labor, GulfTalent said.

Payments rose fastest in the United Arab Emirates, at 13.6 percent, followed by Qatar at 12.7 percent, Dubai-based GulfTalent.com, an online recruitment firm, said in an e-mailed statement today. Saudi Arabian pay increased an average of 9.8 percent, it said.

Higher wages can increase inflationary pressures as demand for goods grows. Salaries are outstripping the official rate of inflation in the United Arab Emirates, which stood at 11.1 percent in 2007, while they are below the rate of inflation in Qatar, where prices increased an annual 16.6 percent in the second quarter.

``Pay rises were driven by a continued shortage of talent across most sectors, as well as the spiraling cost of living, particularly in residential rents,'' GulfTalent said. ``Other contributing factors include large pay hikes awarded to government employees, as well as rising salaries in India, the Gulf's main source of expatriate professionals.''

The U.A.E. lifted the salaries of federal government employees by 70 percent in February, while in Oman government wages were increased by as much as 43 percent in the same month.

Competition for staff has led many employers to cut their working week to five days from six, GulfTalent said. Many firms reported tensions arising from the award of higher salaries to new employees, resulting in older employees leaving, it said.

Human resource managers expect a similar increase in salaries next year, GulfTalent said.

The company said it surveyed 29,000 people in the Gulf between Sept. 15 and 30.

To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net