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UAE: Fuel reimbursement costs up 38% for companies amid rising petrol prices

It is among the most requested compensations in the country

With petrol prices in the UAE having jumped nearly 75 per cent in July this year as compared to January, companies in the country have reported a 38 per cent increase in fuel reimbursement expenses. New data from Bayzat, an employee benefits platform, shows that on average, the amount spent monthly by UAE companies on fuel reimbursements for their staff has increased by over a third between January and June.

The company also found that fuel is among the most requested reimbursements for UAE employees. The average amount per reimbursement has increased by 18 per cent.

The UAE has increased fuel prices by half a dirham per litre for two months in a row in June and July, reaching Dh4.63 per litre for Super 98 as global crude oil prices consistently stay above $100 per barrel.

The Bayzat study found that there has also been a significant spike in requests for travel reimbursements. On average, the amount spent per month by UAE companies on reimbursing travel expenses grew over five-fold over the first six months of 2022. The data revealed that the average amount spent per travel reimbursement in June was 144 per cent higher than in January this year.

“As this reimbursement category potentially includes travel expenses such as companies’ obligatory issuance of annual tickets home for employees, it isn’t possible to confidently draw inference that business travel has been on the rise. However, with average travel reimbursements having steadily increased month-on-month since the start of the year, it is evident that employees now have an increased comfort level for travel in the post-pandemic world,” the company said.

Remote working options can help cut costs

Employee expenditure data — like fuel and travel expenses — can help businesses adapt short-term strategies to determine “efficiency improvement areas”, according to Talal Bayaa, CEO and co-founder at Bayzat.

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“An obvious solution to keeping fuel and travel reimbursement costs in check would be for organisations to embrace hybrid and remote working as these have already proved highly-effective in keeping employees productive and happy. Furthermore, any concerns that organisations have around maintaining employee performance or tracking attendance can be easily addressed with the new breed of digital HR management platforms,” said Bayaa.

Retaining employees

Insights into what HR requests employees raise the most can help business leaders “craft employee-centric initiatives and programmes that could greatly enhance workforce satisfaction”, Bayaa added.

“Financial compensation is just one element in keeping today’s employees happy and engaged. As organisations compete in the ‘war for talent’, factors such as flexibility, company culture, career progression and perks all combine to play a critical role in attracting and retaining top professionals,” he said.

The data is in line with what HR experts had told Khaleej Times earlier.

“There is an observed increase in employee requests related to compensation and travel allowances due to increased fuel prices. Some companies are increasing employee allowance while others are looking at mid-term increments. There are also some special allowances provided to employees until the situation improves,” Mayank Patel, country head, Adecco Middle East, told Khaleej Times.

According to the industry expert, on average, companies are considering a 7 to 10 per cent hike in salaries and a 30 to 35 per cent increase in fuel allowances.