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Saudi minimum wage called for

Salary gap between Saudi nationals and expatriates is widening

Economists have called for Saudi Arabia to establish a minimum wage policy for both Saudi Arabian citizens and expatriates working in the Kingdom.

Statistics released in the Hay Group’s ‘2012 Saudi Arabia Compensation and Benefits’, show that the salary gap between Saudi nationals and expatriates is widening. Saudis currently earn 17% more than the market average, while non-Saudis get 4% below the market average.

A total of 340,000 employees from 356 companies across 17 industrial sectors were surveyed, with results pointing towards a 3.8% rise in salaries across the Kingdom over the last 12 months. It forecasted an even higher increase of 5.6% in 2013 due to inflation.

“Within the basic pay rise of 3.8% there are three key trends, so we should be cautious in looking at the average,” said Wendell D’Cunha of the Hay Group.

“One trend is the expanding salary gap between nationals and non-nationals, the second is that national new hires are receiving the largest pay increases, and the third trend is an increase in the proportion of salary that is a performance based bonus.”

When it comes to performance, the leadership and management teams of private companies are keen to cultivate a performance culture, but employees state they see little improvement.

Hay Group reports that between 2007 and 2012 there have been little change in the number of employees who believe that the better their performance is, the better their pay and opportunity for advancement will be.

In 2009, 46% of employees in Saudi Arabia felt their performance was reflected in their pay and career progression, in 2011, 42% did.

“In Saudi Arabia, the proportion of an employee’s package that is performance based bonus has doubled from 4 to 8% since 2010, even more so at the senior level. This demonstrates that senior leadership are bought into the idea of pay for performance but somehow, that is not filtering through,” D’Cunha commented.

“This suggests a gap between performance management policy and the understanding of its implementation. It also suggests there are cases where there is a gap in communications and employees are feeling the impact of this disconnect,” he continued.

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