GF
What with tax-free salaries and fierce competition for talent, the GCC is fast becoming a location of choice for Western bankers. But pay is fast being eroded by spiralling inflation. Should banks in the Gulf increase pay accordingly?
For bankers based in the GCC, the most obvious answer is yes.
Before tax, bankers in the Gulf are still a lot worse off than their Western counterparts. A salary survey by recruiters Charterhouse Partnership suggests that the average analyst investment banker will earn around $65k in the UAE. Meanwhile, US peers can expect $60k-$70k in the first year, rising to $70k-$80k and then $80k-$90k, according to search firm The Options Group.
At the senior end the difference is more pronounced. An MD in the Gulf will haul in an average $343k in the UAE. London counterparts will take home 270k ($540k), according to a Robert Walters salary survey.
When tax is taken into consideration, the GCC bankers at the lower end are actually better off. An analyst earning $80k in the US would take home $65.1k. While an MD (on the higher tax bracket) will only be marginally better off than those in the GCC – earning a net $374k.
Still, headhunters tell us that Western bankers are increasingly refusing to take a lower gross salary in the Gulf, in spite of the tax-free benefits.
It’s also questionable whether GCC-based banks can afford to pay up. A survey by Hewitt Associates says that salaries now make up 60% of their operating costs.
Should local pay increase in line with inflation? Or do GCC bankers already earn too much?
I think that the bankers in the gulf are dealing with simplier products, more plain vanilla products and services compared to their Western counterparts. Therefore, there is no need to match their salaries with those of the West.
Pay peanuts, get monkeys. We no longer want monkeys.
agree with CT
Agree with James; if you pay peanuts you tend to get the bottom end of the talent pool.
The end cost to the company (what with increasing training costs etc) will be much higher for hires who should not be there in the first place.
Compensations and benefits being a key joint component of total rewards are often tailored to the scope,yield and income, overall and individual performances and level of goal achievement.
Salaries should also go in line with the impact of economic trends on the business……..Therefore it is up to the Executives and Boards of organizations to deem the relevancy or irrelevancy of increasing or decreasing salaries independently of other businesses,provided they perpetuate the life of the organization at a competitive level.
there is no point talking about take home salary only. we need to look at long term implications. One needs to consider the fact the Gulf jobs are generally shorter term assignments for expatriates. the experience in gulf does not necessary count as well when the expatriate goes back home.
the environment is hostile.
if bankers do not get compensated for these issues , there will be no incentive for good people to leave home and come to gulf. only people who are not making it good in their home will come to gulf.
Choice is clear : you want cream and leaders provide enough motivation. and the only motivation that gulf provides is Money.
Gulf wants to beat the world record in buildings , play grounds, airports and so on. let them pay equal , if not more than others in the world
the positve variance in the GCC maybe put down to ‘hardship allowances’!!
i can understand when we say that the work culture and the job is simpler in the gulf than european countries. when a person is transferred from european base to gulf why should his salary be reduced? if its tax free its his benefit isn’t it. and if the banking activities are not complex is it that persons mistake? Best talent always comes for a price. only peanuts can bring monkeys.i m totally in favour of rise in salaries for bankers.
Paying the highest does not vlidate that you get the best. There is a trade-off between good salary and productive, transparent culture – at this is what attracts th professional achievers & deliverers.
Trying surviving on peanuts in Abu Dhabi or Dubai when you have to dish out at LEAST US$30,000 a year in rent for a two-bedroom apartment. We might not have to pay taxes here but we do have rent, which is a tax-equivalent because of its relative magnitude here in the UAE.
I am igree with the aboe A Stock alnalyst comments on for that.
A year in rent for a two-bedroom apartment. We might not have to pay taxes here but we do have rent, which is a tax-equivalent because of its relative magnitude here in the GCC.
you guys talk as if rents in london are dirt cheap….
There is a special situation in the Gulf now. These people dream of becoming some serious player in finance, there is actually lots of money and they need people to make this money grow; they lack the talent, they claim they want the best; hower, inflation is super high, rents are simply..unacceptable particularly in Dubai, Abu Dhabi and Doha; the region undeniable provides no culture, and a lower lifestyle, then what is the magic word if you wan to keep the best????? is that so hard? Oh, and did I mention there is a huge shortage of real professionals in Finance and banking for example, and HUMMMM did I also mention that there is discrimination; suddenly and European comes making USD150K for an Associate position, but wait! his Indian or Pakistani or Arab colleague next cubicle making USD50,000 a year for the same job! MMMM or Finally, did I also mention that this a place wants to compare to London, NYC or other first-grade world Financial Centers, maybe, but what is the magic word again?????????
Over my 3 decades of investment banking experience, I have found most British bankers who move to the GCC are primarily at the bottom of the talent pool, yet earn higher salaries than their counterparts from other parts of Europe or the GCC. Whilst the product range in the GCC are truly primitive than say the UK, most British bankers receive training in the GCC, before heading to more sophisticated financial centers in pursuit of higher pay.
Joe –