Firms plan 5.4% wage hike in 2015 to attract workers in Oman

Muscat: Have the salaries in Oman been keeping pace with its inflation rate? Are the companies here consistently conservative with their payroll budgets? 

Questions such as these have been uppermost in the minds of the working community in Oman. 

Now, here is news that could bring smiles on their faces: Companies across Oman are predicting an average salary increase of 5.4 per cent in 2015, according to the latest research from management consultancy firm Aon Hewitt.

The figure is slightly down from forecasts made in 2014, which was 5.6 per cent, indicating that companies across Oman are being slightly more conservative with their payroll budgets.

Among the participating GCC organisations, Oman and Saudi-based companies gave the highest salary increase projection for 2015 at 5.4 per cent each, a slight decrease from 2014 predictions.

According to the National Centre for Statistics and Information (NCSI), inflation in Oman has remained subdued in the first quarter of 2014, despite a rise in consumer spending. 

According to the research firm Capital Economics, inflation in Saudi Arabia is likely to remain steady at around 3.5 per cent-4 per cent over the coming years, as growth weakens in comparison to the past decade.

Bahrain gave the lowest pay increase projection of 4.5 per cent, followed by the UAE 4.8 per cent, Qatar 5.2 per cent and Kuwait 5.3 per cent.

Speaking to Times of Oman, a senior official at the Oman Chamber of Commerce and Industry (OCCI) said the survey may suggest that private companies in Oman are planning to attract more local workers through providing additional incentives.  

"The fact that Oman and Saudi-based companies gave the highest salary increase projection for 2015 may also suggest that the challenge of attracting local employees is more serious in these two countries," said Redha Juma Mohammed Ali Al Saleh, OCCI vice chairman for administration and finance affairs.

Asked how he sees the trend in salary increases in Oman, Al Saleh said salaries would remain stable in the near future but may be revised later, according to the supply and demand in the market.

In addition, an Omani banking official said that the results of the survey in Oman and Saudi Arabia may suggest that firms in these countries were offering lower salaries in the past and are now seeking to adjust themselves with other neighbouring countries, in terms of labour salaries. 

"They may seem to be planning to attract more locals, as national workers are always seeking to work for the companies that pay them well. Firms, of course, want to keep their employees, so they have to make some adjustments,

Salary increases are a result of competition in the market, he said, adding that firms keep revising the salaries they offer to fulfil the demands of labourers. 

"Even if there is no inflation, prices of goods and services will go up gradually and employees will have higher expectations," he said.

In the banking sector, a salary increase has been anticipated, the official added. 

Rashid Khalfan, owner of a construction company, said that the survey suggests that the Oman-based companies want to retain their workers, who are difficult to find due to new laws. 

"And you can't retain people if you don't give them a hike every year," he said.

Released as part of its annual Global Salary Increase Survey 2014, the figures are based on data from a robust comparative group of over 500 organisations across the Middle East.

The report offers a unique snapshot of salary increase trends.