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Inflation isn’t all that bad for you

DUBAI — The 12 per cent inflation, mainly due to high rental fees, seen for this year in the UAE and the rising cost of living that exceeds pay increases made annual salaries climb to 10.7 per cent this year compared to 10.3 per cent in 2006, according to a study released yesterday by GulfTalent.com, a regional Internet recruitment portal.

The study, Gulf Compensation Trends 2007, said that aside from costly living expenses, sustained economic growth and intense competition for talented workers among companies were key drivers of pay rises in the Gulf states, particularly Qatar and the UAE. It also said the continuing fall of regional currencies pegged to the weakening US dollar (against the euro) was eroding the value of compensation packages for European expatriates in the six-nation Gulf Cooperation Council (GCC). Noting that salaries in Kuwait have been competitive, with the latest appreciation of its currency at three per cent, against those in its neighbours since it abandoned the US-dollar peg, the study said this “may intensify the pressure on other GCC countries to follow suit”.