70% of companies across the GCC plan to review compensation and benefits programmes to mitigate the business impact of COVID-19

 

Dubai, June, 8, 2020 – According to the latest research by Mercer, global leader in redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being, and a business of Marsh & McLennan (NYSE: MMC), 70 percent of GCC respondents have or are planning to adjust one or more elements of their compensation and benefits (C&B) programmes in response to the business impact of COVID-19.

 

The survey titled “Compensation and Benefits Impacts of COVID-19” states that local organisations have been quicker to react compared to their international counterparts who may be better positioned to sustain the negative financial impacts of the pandemic. 81 percent of GCC based companies have or plan to make C&B programme adjustments, whereas 53 percent of internationally headquartered companies have made or plan to make changes.

 

Commenting on the findings of the survey, Nuno Gomes, Head of Career at Mercer MENAT said: “Overall, organisations in the GCC are optimistic that the economic effects of COVID-19 will be short lived as a result of stringent measures to contain the virus and stimulus packages offered by governments. With employee wellbeing remaining a key priority, organisations are trying to preserve the financial safety of their lower level support functions by focusing salary reductions at the higher career streams. Furthermore, salary reductions have been mostly within the 15-25 percent range and applied for a short period of time”. 

 

Suspended or delayed 2020 salary increases and temporary reductions in base salary and allowances are some of the fixed cost reductions that organisations across the GCC have taken or are planning to take. In the UAE, 28 percent of the organisations surveyed have already, or are planning to reduce the base salaries of one or more of their career levels. This percentage is similar in the other GCC markets as seen in Saudi Arabia where 30 percent of organizations have or will reduce base salaries, and in Bahrain where 29 percent of organisations have or will take this action. A key trend across the entire GCC is that the prevalence of reductions on base salaries or cash allowances is significantly higher at the CEO and senior management level than at the support level. The majority of respondents plan to limit these reductions to three months. Another common intervention has been changes to headcount. Almost 40% of organizations across the GCC have or will implement a hiring freeze, enforce permanent terminations or place employees on furlough. 

 

Organisations in the life sciences and financial services sectors have shown to be more resilient to the impacts of COVID-19, with 87 and 58 percent respectively reporting no changes to their C&B programmes. Alternatively, the majority of the organisations within the engineering, construction and real estate sector (90 percent) and those with diversified operations spanning multiple industries (86 percent), have reported taking actions across one or more C&B programmes.

 

Further commenting on the research findings, Carolina Vorster, Workforce Products Leader, MENA at Mercer, stated: “We have seen varying approaches taken by organisations, depending on the industry they are in and how resilient the business is. When mitigating the effects of COVID-19, there is no single approach that is suitable for all organisations; instead, the measures taken or considered, are influenced by how quickly organisations can or have to make decisions, how mature the business is and their corporate social responsibility towards their employees. Whether the organisation is enforcing leave, reducing salaries or laying off employees, it is important that they consider the balance between business impact and the short and long-term effects on the employees.

 

According to the report, many organisations are also revisiting their leave policies by obliging employees to take paid leave within set time periods, encouraging the utilization of carry over leave days, or using leave balances to shorten workweeks.  43 percent of organisations that have already made changes to their C&B programmes have cited adjustments to leave policies as one of their actions. 

 

The sample contributing to the analysis is comprised of 168 groups, spanning various industries with their subsidiaries operating across the GCC.

 

About Mercer

 

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of  Marsh & McLennan Companies (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 76,000 colleagues and annual revenue of $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.me.mercer.com. Follow Mercer on Twitter @Mercer.

 

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