Total reward practices are undergoing change in the Middle East, according to a recent survey of benefits and HR practices conducted by Mercer. The survey covers seven countries (Bahrain, Egypt, Israel, Kuwait, Qatar, Saudi Arabia and the UAE), over 500 benefit plans and 61,000 employees.
Survey results indicate that the region's traditional focus on high base salaries and cash allowances is shifting towards long-term incentives and "protection" benefits like pensions and medical, life and disability insurance.
According to Mercer, the changes in benefit practices are being driven by the continuing influx of multinational companies to the region, an expansion of the expatriate workforce (some 85% of Dubai's population is now expatriate), and the greater mobility of expatriates between jobs. In the United Arab Emirates, legislative changes have also fueled the trend.
Some outtakes from the survey:
Retirement benefits - The change in pension practices, in particular, is driven by workforce mobility as many expatriates are now choosing to stay long-term or permanently relocate. Expatriates in most of the Gulf States have no statutory entitlement to local state pensions, and local job moves generally result in the loss of membership of their home country pension plan. This has prompted an increase in employer-provided supplementary benefits.
While only 8 percent of multinational companies surveyed currently provide a supplementary pension plan in the UAE, 65 percent said they are looking to change their benefit provision - including setting up supplementary plans. These plans are generally established on a defined contribution basis through offshore investment funds that are often associated with international pension plans.
Medical benefits - The UAE’s national health service used to be free to all UAE nationals but this is no longer the case. In addition, private sector companies in certain locations such as Abu Dhabi and the free trade zones must provide all their employees and families with a private medical plan. Consequently, the majority of multinationals in the UAE (85 percent) provide a supplementary medical insurance policy, usually through an insured arrangement.
There are also mandatory requirements for private healthcare in Saudi Arabia and Egypt but the majority of multinational companies in the Middle East (80 percent) provide private medical benefits irrespective of these requirements.
Other benefits - Almost all companies in the Middle East provide additional perks and allowances to their expatriates. These vary between countries and employers, but the majority provide allowances for housing, schooling and flights home.
A company car benefit is also commonly provided (60 percent of survey participants across the Middle East). Throughout the region, the most popular fringe benefits are long-service awards, mobile phones, social allowances and subsidised health club memberships.