Salaries offered by multinational companies (MNCs) are nearly double those offered by small and medium enterprises in the UAE and GCC, hence allowing the former to hire the best talent available in the market.
People working in the accounting and finance, administration and secretarial, human resources, information technology, sales and marketing and supply chain sections of the UAE and GCC-based MNCs earn approximately double - sometimes even much higher - than the employees toiling for the SMEs, data by Nadia Global Recruitment and Executive Search shows.
Per industry trends, people working for SMEs earn the least monthly income while their counterparts in MNCs earn the highest. Professionals working in trading companies earn more than their SMEs counterparts while those employed by free zone companies earn higher than both of those. Employees of a large group - such as family-owned businesses - earn more than the previous three groups but less than MNCs.
For instance, an account assistant, senior accountant, chief accountant or finance manager working in a large foreign firm earn as high as 275 per cent more than those working for smaller local companies. Similarly, in the administration and secretarial sections, executive personal assistants sometimes earn three times more than their counterparts working for SMEs in the UAE and Gulf region.
Ian Giulianotti, executive director for recruitment at Nadia Global, says there is a market rate for every job and people generally earn between 15 and 20 per cent above or below that market rate.
"At the end of the day, it is all about how much your employer affords. If your employer is a big company who is making billions of dollars then and you have a small F&B retailer, making $300,000 and that is what decides. It is all about profitability and size of employers," he said.
"For larger companies, it cost much more money if they will lose staff and rehire new worker. But for SMEs of four or five people, if one person leaves it will not cost that much. People are paid according to three things - experience, expertise and education. So all those factors come into play. Someone with professional qualification with 10-year experience would expect a larger return on his investment," he added.
Leith Ramsay, managing director at Michael Page Middle East, said the huge difference in salaries between SMEs and MNCs comes down to scale of the organisations.
"To be honest, it comes down to scale of the organisations with regard to revenues and trading profit that they are able to attract and retain more talent and pay a bit of premium. It is larger growth revenues and net profit that MNCs are able to build structures and attract talent above SME guys."
Plus, he said, since MNCs have more resources at disposal, they offer different packages. "Some offer fixed annual bonus and incentives to profit sharing. SMEs can be more flexible. They offer less guaranteed salary but higher commissions."
Suhail Masri, vice-president of employer solutions at Bayt.com, said its latest survey revealed that 66 per cent of respondents in the UAE believe salaries are either increasing or sustaining the same range.
"Respondents who believe salaries are increasing in the UAE attribute it to, good corporate performance and increased profitability, growth in opportunities and economic growth, as well as inflation and a rise in the cost of living," he added.
Data showed that huge difference exists even when it comes to salaries of executive jobs in the UAE and GCC.
Pay scale gap among nationalities
Ajay Malhotra, CEO of Nadia Global says the days of highly-inflated salaries and subsidies to cover living costs are now a thing of the past.
"The gaps in pay scale by nationality are gradually diminishing and employers are taking a longer term view on both retention of staff and remuneration policy," says Malhotra.
Giulianotti says the UAE becoming more cosmopolitan.
"At Pope Francis' visit, there were 112 different nationalities. Around 25 years back as per the demographics of the UAE, 75 per cent were Indians and majority of them were from Kerala. Now there is still a huge population of Indians and Keralites but it is diminishing all the time as more and more nationalities are coming in. There is a much bigger choice in terms of nationalities now than it used to be; so the gap is narrowing. If we look at the booming economies, average pay rise for middle class in India over the last 2 years has been 12 per cent, so it was becoming less attractive to move to Dubai and employers were looking at alternative sources," said Giulianotti.
He said on average 500 people used to register at Nadia a day with 60 per cent Indians, 20 per cent Pakistanis and 15 per cent Arabs and 5 per cent other nationalities. Now, it's 50 per cent from Subcontinent and the remaining 50 per cent from the EU, Poland, Greece, America and countries from the middle of Pacific Ocean.
"In older days, the managers were from the UK and support staff was from Indian Subcontinent. Today that is not the case. Now, the UAE has evolved and has become a place to live on a long term basis," he added.
However, Leith Ramsay of Michael Page, believes that nationalities has nothing to do when it comes to pay scale gap issue.
"There are a small premiums on the nationalisation side. But it is all about results and track records."
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