Despite its near legendary reputation as a high-paying destination, salary packages for expats in the United Arab Emirates may soon be cut back due to the decreases in the local cost of living.

The UAE has long been popular with career-minded expats thanks to no income tax, good social care, great weather and significantly above average salary packages.  However, the local job market for expat professionals has grown increasingly competitive, and there is now a significant supply of highly qualified individuals already in the region. Added to this pressure is the growing number of qualified and experienced local citizens within the executive workforce.

Housing allowances account for a significant proportion of the generous salaries given to expats, but due to prevailing economic conditions, rental fees and associated costs are decreasing markedly, a disparity, which employers are likely to soon correct.

Larisa Muravska, local employment consultant, points out that there are two types of expatriates in the UAE: expatriates who are sent to the UAE by their HQ for an assignment, and foreign employees hired by UAE-based companies, directly under a local contract. For both types of expatriates, companies usually provide packages to include base salary, benefits, housing, transportation, school allowances and much more. With decrease in general life costs, such packages may get reduced in the future.

According to David Harra, a Financial and Investment Analyst, many expats are willing to accept lower salary packages just to get into the UAE, saying that  “In such cases, individuals should always ensure they speak to independent financial consultants before moving, to ensure that any and all methods for increasing their income and assets can be taken advantage of.”

If these conditions will result in widespread reductions in expat salary packages remains to be seen.

References:

Emirates 24/7