Economic and Income Trends in Middle East for Expats

Saurabh Tyagi 4m 1,041

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The Middle East is known for its huge population of expats. The region’s attraction lies in its thriving economy, with huge pockets of oil and petroleum leading from front. However, be it any part of the world, Middle East or the United States, compensation and benefits will remain the top motivating factor for professionals to work. Here are some facts about the income that Middle East offers to expats.

The Middle East region has consistently remained one of the top choices of expats. Countries like UAE, Qatar, Oman, Kuwait and Saudi Arabia, all of which form the part of the Gulf Cooperation Council, and Middle East, attract millions of expats every year. However, it remains a large and divergent region and some nations are dropping off altogether from the list of an expat’s choices owing to unstable political setup (Egypt and Syria) and uninspiring economy (likes of Tunisia, and Jordan). Iran, which is the second largest country of Gulf, is also another major regional power that exerts significant influence over global economy through its large reserves of fossil fuels, including the largest natural gas supply in the world along with fourth largest petroleum reserves. Hence, Iran is also amongst the top choices of expats for pursuing a career outside their country.

Economic trends across major GCC nations & Iran

The Cooperation Council for the Arab States of the Gulf, also known as Gulf Cooperation Council is a political and economic union of Arab countries that border at Persian Gulf, inclusive of Bahrain, Qatar, Oman, Kuwait, Saudi Arabia and the United Arab Emirates. Since all nations of GCC are treasure troves of oil and petroleum and world’s biggest oil exporters, these countries have very different economic demographics from other countries of Middle East that import oil, such as Syria, Tunisia, Egypt and Jordan amongst others.

The dynamic economies of GCC enjoy the confidence of the largest proportion of expat workforce in the world with most multinationals having their regional head offices in Dubai, a part of UAE. UAE’s more than 90 per cent of the population is composed of expats while in Qatar 94 percent of the labor population belongs to this category, as per a report titled ‘Qatar Economic Insight 2013’. This high rate is owing to the strong growth of construction sector and the resultant growing requirement of labor. The region also witnesses greater government spending which might be a good thing at first but also leads to inflation and higher cost of living for residents.

Saudi Arabia: Known for its huge oil reserves and as one of the biggest oil exporters in the world. 90 percent of export earnings come from oil. Government spends generously on education and housing of the general population. Per capita income is around $24,000, amongst the highest in the world, which is expected to rise to $33,500 by 2020 as per records. Inflation was at 4.9 percent by the end of 2012.

UAE: Along with growing oil exports, the country is also boosting its non-oil sectors such as tourism, trade and transportation. Commodity prices mostly remain stable while inflation rates are under control at 1.5 to 2 percent. The per capita income is around $48,158 as per 2012 records, amongst the highest. Dubai, a major city of UAE is often known as expat’s paradise.

Qatar: According to report Qatar Economic Outlook, 2013-2014, the country had a real GDP growth rate of 5.3 percent in 2013, and is expected to have growth of 4.5 percent, owing to contracting of output from maturing oil fields. However, non-oil sectors will continue to witness growth, construction being the leader amongst them. Consumer price inflation was 3.5 percent in 2013.

Kuwait: High level of oil exports has made this country amongst the richest in the world. With a population of just 3.8 million, the country has 151.0 billion of GDP, which is growing at a rate of 5.1 percent. The per capita income stands at $39,898 while inflation remains controlled at 2.9%.

Oman and Bahrain are the most diversified economies of GCC, but still remain largely dependent on oil. Both countries have large scale diversification plans underway. The inflation remains controlled; under 3 percent for Oman and under 1.5 percent for Bahrain. Iran is not exactly the most attractive destination, as the inflation is officially at 25 percent, indicating an economy not too conducive for growth.

Compensation and benefits trends for expats in Middle East

As already stated, UAE and Qatar have up to 90% of their working population belonging to expat class, while Saudi Arabia has around 50% of expat working population. Attracting expats with generous allowances such as housing, transportation, lifestyle support allowances, meals is a ritual in most Middle East nations. Common across all GCC nations is the end-of-service benefit scheme, which is exclusively for expat employees. This is similar to a pension scheme and is being modeled after western styled international pension plans to retain more expatriates. The biggest motivating factor for expats to choose Middle East could be a tax-free environment, which often makes them stay for longer durations.

Annual pay rise is well above the annual inflation rate. As per a report, employees can expect to earn an average pay rise of 5 percent while the inflation will average around 2.5 percent. This is a good news for expats. The remuneration sector is favored towards base salary and guaranteed allowances, which make up to 80 percent of the total compensation. This is very unlike their western counterparts where base salary accounts for mere 30 to 40 percent of the total remuneration package and rest of the CTC being variable and long term benefits. International publicly listed companies are now including long-term incentives as a part of the total Cost to Company. Short term benefits like mobile phones and private medical insurance are also popular in this region.

Bottom line: It does not surprise us to know that UAE tops the global rankings of net salaries, while Saudi Arabia rounds it up in third position. Retention levels are greater than ever, and this is a time when any expat would love to make a career in these countries of Middle East.

About the Author

Saurabh Tyagi is an expert writer having interest in diverse topics like education, technology, career and Web 2.0. He is a social media enthusiast and a self-confessed gadget-freak, who loves to follow the latest happenings in the tech world.