Western style pay and benefit practices are on the rise in the Middle East, according to a new study by Mercer. The survey showed the traditional focus on salaries is shifting to include a variety of benefit options.

Western style pay and benefit practices are on the rise in the Middle East, according to a new study by Mercer. The survey showed the traditional focus on high basic salaries and cash allowances are shifting towards long-term incentives and 'protection' benefits.  Lifestyle benefits are also on the increase.

These changes in benefit practices are being driven by the continuing increase in multinational companies based in the region. For example, some 85 percent of Dubai's population is now expatriate. 

Retirement benefits

The change in pension practices, in particular, is driven by workforce mobility as many expatriates are now choosing to stay long-term or permanently relocate. Expatriates in most of the Gulf States have no statutory entitlement to local state pensions, and local job moves generally result in the loss of membership of their home country pension plan.

Commenting on particular developments in the United Arab Emirates (UAE), Yvonne Sonsino, a worldwide partner in Mercer's international consulting group, said: "The recent relaxation of UAE employment law has made it easier for expatriates to move jobs in the local market. In the past, expatriates would commonly stay for three-year assignments and then return home.  Now many are choosing to move on more quickly to other positions in the region."

Sonsino adds, "With the current intense competition for local talent, many companies are now looking to provide top-up pension plans to help attract and retain employees."  While only 8 percent of multinational companies surveyed currently provide a supplementary pension plan in the UAE, 65 percent said they are looking to change their benefit provision.

Ms Sonsino added: "The UAE does not impose salary caps or tax restrictions to act as restraints on the design of local pension plans.  This effectively gives us a blank sheet of paper for introducing new plans, and a lot of flexibility to be creative in meeting the needs of particular clients.”

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