MANAMA, 5 December 2006 — A survey carried out by the Dubai based GulfTalent.com concludes that high inflation, growing employment opportunities in countries like India and the weakness of dollar-pegged regional currencies, will drive up to six percent of foreign nationals living in the Gulf to leave and return to their home countries within the next 12 months.
The report, titled “Pay, Inflation, and Mobility in the Gulf” claims that high inflation — which, according to Qatar and UAE official estimates, stand at 7.2 percent and 8.5 percent respectively — has eroded much of the purchasing power and saving potential for expatriates.
“This, combined with growing employment opportunities in other emerging markets, particularly India, and the weakness of dollar-pegged regional currencies, have made the Gulf a financially less attractive destination than it has been in the past,” the survey says.
The report was based on GulfTalent.com’s survey of 18,000 professionals — including 1,000 GCC nationals, 6,000 expatriates living in Gulf countries and a further 11,000 expatriates based outside the Gulf with an interest in relocating to the region.
The report noted that the region continues to attract experienced professionals from across the globe, saying that the newcomers are attracted to long-term aspirations and interesting career opportunities now available in the region, with short-term financial considerations playing a less dominant part in the overall value proposition.
The UAE, and Dubai in particular, remains the Gulf’s most attractive destination for professionals despite one of the highest costs of living in the region and salary levels that are below Qatar and Saudi Arabia.
The survey concludes that 73 percent of expatriates relocating to the Gulf prefer to work in the UAE, while 78 percent of the country’s current expatriate residents plan to remain there, the highest rate in the Gulf.
The main reasons cited for the UAE’s popularity include interesting career opportunities, good infrastructure and facilities, as well as a more liberal social environment than its neighbors.
Qatar ranked as the second favorite destination for expatriates, mainly due to above-average pay packages on offer.
Saudi Arabia — which according to the survey has the lowest cost of living in the Gulf — is seeing a resurgence of interest as the security situation stabilizes and salaries rise at well above the inflation rate. “Despite rapid economic growth, rents in Saudi Arabia are 19 percent of average household income, compared to 30 percent in Dubai and 33 percent in Doha,” the survey found.
Based on the 12-page survey, average rents have increased by 83 percent in Qatar and 60 percent the UAE over the last two years. The price of fuel increased in the UAE by 30 percent late last year, leading to ripple effects on other essential goods and services. Health and schooling have become much more expensive, adding to the cost burden.
Other countries such as Kuwait have also seen prices rise, though to a lesser extent.
Saudi Arabia, the region’s largest economy, has so far been an exception to this trend. Despite rapid growth and rising income levels, it has continued to enjoy low inflation, thanks partly to generous state subsidies as well as the country’s larger established economic base.
Rents in Saudi cities are now less than half of those seen in Dubai and Doha.
The survey also found that Qatar registered the highest average increase in pay at 11.1 percent, followed by the UAE at 10.3 percent. Kuwait stood at 8 percent, close to the regional average. Saudi Arabia and Bahrain had below-average salary increases of 6.5 percent and 6.4 percent respectively.
Out of the six Gulf Cooperation Council states, Oman experienced the lowest increase at 5.6 percent.
The pay rises were the largest in the construction sector at 12.8 percent, followed by banking and finance at 8.2 percent and oil and gas at 7.7 percent. The lowest pay rises were health care and education at 4.5 percent and 3.5 percent respectively.
The survey also found evidence of some limited movement among Gulf nationals — particularly those with higher education, international experience and good English language skills — due to advantages of local familiarity, proximity to family and friends as well as opportunities available for natives.
