GCC Employers are optimizing costs by shifting from cash allowances to a focus on benefits for employees. Contributor Christopher Page, CEO, Talent, Rewards & Performance – Aon Middle East and Africa.
According to the latest Gulf Cooperation Council (GCC) Allowances and Benefits Survey conducted by Aon the GCC region has witnessed a concerted shift from a pure-pay model to an emphasis on ‘total rewards’. Representing a notable increase in the prevalence of benefit offerings for employees, the results are seen as a positive indicator for the region in attracting and retaining the right talent.
Whilst in previous years organisations were spending more aggressively on their cash allowance packages, the results this year show an increase in the prevalence of benefits being offered to employees across the region. The enhanced end of service benefit (EOSB) has also become a more frequent offering amongst employers, with figures more than doubling from 17% in 2017 to 35% in 2018, according to Aon. The prevalence of other benefits have registered strong growth too with life assurance at +12%, accidental insurance at +20% and long-term disability at +20% compared to the last year.
According to Aon experts, this growing trend is reflective of organisations aiming to optimize their costs and their total reward offering, whilst customizing it to the needs of their workforce. Conducted by Aon between February 2018 and April 2018, the comprehensive study covers diverse business sectors across the GCC region and is based on an analysis of 100+ multinational companies and locally-owned conglomerates across different sectors. Other top-level findings from the study revealed that:
Paternity leave is becoming increasingly common amongst the best employers in the region; Maternity cover is the most prevalent treatment covered under medical benefit to all employee groups in the GCC; Standard working hours for the region clock in at 48 hours, with a range spread of eight hours per week; Typically, the maximum number of working days for annual vacation is 25 days and most organizations allow deferral of annual leave from one year to the next.
The most prevalent allowances offered to executives, management and professionals are housing allowance, transport and children’s education assistance. Employees at Executive and Management levels are much more likely to receive education assistance, with a prevalence average of 83.5% amongst this group, whilst for professionals and support staff levels, the percentage is notably lower
The least common benefit for executives and professionals is overtime (10% on average), compared to a prevalence average of 50% for support staff. Two thirds (65%) of organizations provide relocation allowance to employees at the executive, management and professional levels, compared to just over one third (34%) for support staff
Christopher Page, CEO, Talent, Rewards & Performance, Aon Middle East and Africa, said: “The results of this study are particularly interesting, as they demonstrate how organisations are looking at and leveraging allowance and benefits structures to secure and retain the right talent with the right skillsets to help drive their business objectives. This is extremely important for the region, which is focused on promoting and nurturing local talent to support the growth vision of the GCC nations. The study also points at the shifting trends in the allocation of allowances and benefits, which will serve as a referral point for industry best practices.”
Arun Taneja, Rewards Consultant, Aon Middle East & Africa, said: “The shift from just pay to total rewards is a welcome step by organisations in the region, which also meets the aspirations we are seeing amongst young talent who are seeking challenging yet rewarding career opportunities. Moreover, a total reward offering helps organisations achieve efficiencies in terms of the Human capital cost base. The GCC Allowances & Benefits Survey highlights how different modes of allowances and benefits are changing, and how they are differentiated based on the employee groups– a trend which we very much expect to see increasing over the coming years.”