Dubai: Employees in the UAE’s private sector who are expecting a bonus anytime soon shouldn’t get their hopes up.
According to human resources and compensation specialists, many companies that are privately run are getting more cautious with financial outgoings, so they’re more likely not to reward their staff with extra salary this year.
Government sector employees rejoiced this week over the announcement that they’re getting a bonus of one month’s salary in celebration of 100 years since the birth of Shaikh Zayed, the UAE’s founding father.
Will private firms follow suit?
So far, only one private company, Union Cooperative, has stepped forward to announce that their workers will receive a centennial bonus. Emirates Group has also just announced it is giving away a "profit share" of five weeks' salary to its staff, but this is a payout that the company distributes almost every year and is dependent on financial performance.
Other organisations contacted by Gulf News were non-committal about following Union Coop’s example, although some of them did praise the UAE government for the generous initiative.
“I don’t think the private sector will follow to give increases as there are various dimensions to look at from total reward to employee engagement,” said Vijay Gandhi, regional director for Europe, Middle East and Africa, products group, at Korn Ferry Hay Group.
“The employee proposition in private sector is different as profitability is key as opposed to welfare of the residents of country. Importantly, the total reward in private sector had different kinds of bonuses and non-cash benefits so it is not equivalent comparison to make.”
Other sources begged off from commenting on the bonus payout, citing that it doesn’t have any bearing on the private sector at all.
Unsure about bonuses
In a survey conducted by recruitment specialists Robert Half, almost a quarter of the UAE’s large businesses in the accounting and finance industry (24 per cent) did say that they don’t intend to award bonuses in the near future.
In another study among hiring professionals and salary and benefits managers who are mostly based in the UAE and Saudi Arabia, it was found that 35.3 per cent are unsure about handing out bonuses to their staff in 2018.
The responses were gathered by the Compensation and Benefits Forum and The HR Observer, a platform for human resources experts in the region.
According to Agni Skafidas, managing director at compensation and benefits expert Olam, many organisations are not sure about giving away extra payouts, as they are still adjusting to a new tax environment and are also cautious amid the current economic conditions.
“This could be due to the implementation of VAT and their desire to see how the company is performing during the challenging economic conditions,” Skafidas told Gulf News earlier.
Firoz Merchant, a philanthropist and founder/chairman of Pure Gold Group, said the UAE’s bonus payout is indeed a “thoughtful gesture” that will further boost consumer spending, but he did not confirm whether or not he’s extending the same benefit to his staff.
“We thank the UAE leadership for boosting the morale of all federal government employees with a one-month salary bonus… The ‘Year of Zayed’ is all about giving and caring with a focus on the progress of the people,” he said.
“The initiative underlines the commitment of the UAE leadership to promote the genuine well-being of the community. This thoughtful gesture will further energise the market and boost customer spending, in turn enhancing the performance of the retail sector,” Merchant added.