x Abu Dhabi, UAEMonday 24 July 2017

GCC oil sector salaries dwarf global rate

Salaries in the GCC's oil sector have grown at twice the global average as a result of the pay increase enjoyed by local staff working in national oil companies.

Oil workers at the desert oil fields of Sakhir, Bahrain. Salaries in the Gulf region are outstripping global rates. AP Photo / Hasan Jamali
Oil workers at the desert oil fields of Sakhir, Bahrain. Salaries in the Gulf region are outstripping global rates. AP Photo / Hasan Jamali

Salaries in the GCC's oil sector have grown at twice the global average as a result of the pay increase enjoyed by local staff working in national oil companies.

Pay in the Arabian Gulf's hydrocarbon industry increased by an average 16.7 per cent last year, dwarfing a strong global growth rate of 8.5 per cent, according to a study by the recruitment consultant Hays.

"Over the last 18 months to two years we have seen a major increase in what nationals are getting paid," said Raj Sharma, regional director at Hays in Dubai.

In the aftermath of the Arab Spring, remuneration for nationals across the Gulf was increased dramatically. For Emiratis working in government or government-related entities in Abu Dhabi, basic pay doubled and benefits were extended. In Oman, nationals working in the oil industry enjoyed salary increases of 100 per cent, said Mr Sharma.

High oil prices, downstream development and a skills shortage are driving salary increases in the oil and gas sector. The expectation is that income will grow handsomely again this year.

"There is certainly a trend in increased salaries for the oil and gas industry generally and the Middle East especially," said Adil Anwar, a business manager at the recruitment consultant Reed.

This is reflected in the wage expectations of industry professionals.

More than half of the global respondents to the Hays survey believe that pay will rise by more than 5 per cent next year, while 27.5 per cent of these think remuneration will be more than 10 per cent higher in 12 months' time. Oil and gas professionals in the region can also expect wage increases.

In a survey by the jobs portal OilCareers.com, more than 60 per cent of respondents in the Middle East believe that salaries will increase this year, whereas less than 5 per cent anticipate a decline in pay. Almost half of respondents also believe that hiring will increase, as opposed to only about 14 per cent who believe the job market will shrink.

Wage increases are not confined to nationals. At present, oil and gas expatriate workers receive an average US$79,400 per annum (Dh291,632), according to Hays. In Saudi Arabia, the average is $81,000, in Qatar $77,900. Expat workers in Iraq top the pay scale by averaging $124,500 a year.

Oil prices recovered quickly from their slump in the aftermath of the global financial crisis. With the exception of one short blip, Brent prices have hovered above the $100 a barrel mark from the beginning of last year. The windfall is encouraging investment in oil production, as high prices encourages additional output and makes hard-to-access, expensive oil economically feasible.

"Oil prices are reasonably high, and very stable. It's in the right sort of region for investment and it's profitable to produce," said Mark Guest, the managing director at OilCareers.com. "The rates of pay are increasing but are still sustainable for the industry."

As oil companies in the Gulf expand production and governments build up their petrochemical industries and refinery capacity, quality of life is becoming increasingly important in the competition for experienced staff, a trend that benefits the UAE.

According to OilCareers.com, no country in the region combines upstream and downstream development like the UAE, where Abu Dhabi is expanding oil and gas production and its downstream sector.

"Abu Dhabi is the regional hotspot for project activity with offshore and refining projects expected to pick up across the year," the portal said in its annual outlook for this year.

The UAE has to compete for its workforce not only with its neighbours, but also with booming production centres across the world. In its quest to attract much-needed expertise, the Emirates is benefiting from an appeal to expats that no country in the Gulf can match.

"Unlike other markets whose resources are booming but are starved for talent, the UAE remains a preferred destination for expats, offering competitive rates, tax incentives and easy standard of living," said Mr Anwar.

"Dubai and the UAE is generally an attractive region for many, because of the lifestyle one can have and the balance between work and play."

According to Reed's salary guidelines, pay in the UAE hydrocarbon sector is not expected to rise above last year's parameters, however.

While Abu Dhabi draws a considerable oil and gas workforce into its industry, Dubai has established itself as a preferred place for companies to set up their regional headquarters, and as a base to supply operations in more difficult markets with logistics and back office support.

 

fneuhof@thenational.ae