Study: Key trends & developments in GCC's labor market

18 March 2024 Consultancy-me.com

Procapita Group has released its in-depth annual report into the top trends and developments in the GCC’s labor market. Though the talent pool is still mostly male and expatriate, it is increasingly shifting towards female and national. The UAE remains the leader in attracting talent, although Saudi Arabia’s talent market continues to make big strides.

The second annual report by Procapita Group, a pan-regional human capital consultancy firm, was conducted through an analysis of the labor market in the GCC region, covering over 1,200 organizations. The report delves into topics including recruitment talent management, compensation and benefits, and more.

A run-down of the report’s main findings across talent growth, labor market dynamics, and financial compensation.

The talent pool

The employee growth rate in the GCC is overall positive, with over 66% of the organizations surveyed citing increases in 2023. Saudi Arabia saw the highest employee growth rate in the region and Qatar, on the other hand, saw the lowest. That may be due to the completion of projects after the 2022 FIFA World Cup, held in Qatar.

Study: Key trends & developments in GCC's labor market

Source: HR Trends & Practices, Annual Report 2024 from Procapita Group

For the current year, the outlook is more positive. 70% of the organizations surveyed by Procapita Group expect to expand their headcount, with KSA-based players leading the fold. “Organizations in KSA have the highest expectation of growth potentially due to investment in various mega projects to boost tourism and the hiring for mega-projects such as Neom,” said Mohammed Abu Al-Rob, CEO of Procapita Group.

There is significant competition in the region, with powerhouses KSA and UAE competing to attract foreign talent, which make up the majority of their workforce. Indians make up the largest group of foreign nationals working in the GCC region, followed by local nationals, and Egyptians in third.

Study: Key trends & developments in GCC's labor market

Source: HR Trends & Practices, Annual Report 2024 from Procapita Group

Nearly half of the organizations surveyed said they perceive compensation offered in neighboring markets to be a challenge. Indicating a tight labor market, 39% said they find the lack of skilled professions to be a challenge.

As far as the breakdown of talent in the GCC, the report suggests 7 out of 10 talents are expatriates, the largest group of workers, with nationals coming in second, with the latter number predicted to inch upwards because of stiff labor market nationalization policies, like the KSA policy of ‘saudization’.

Study: Key trends & developments in GCC's labor market

Source: HR Trends & Practices, Annual Report 2024 from Procapita Group

Female talent makes up around 29% of the labor force, a figure that many countries in the region are attempted to boost. The UAE, specifically, has made major pushes for increased female representation in leadership positions, while other countries have lagged behind.

Compensation and benefits

The report shows that over three quarters of GCC organizations provided increments to their employees in 2023, with UAE-based organizations being the most generous. Organizations in the region mostly do performance-based increases rather than fixed percentage increases.

Study: Key trends & developments in GCC's labor market

Source: HR Trends & Practices, Annual Report 2024 from Procapita Group

The average salary increase across the GCC for 2023 reached 6.7%, compared to 5.2% the year previous. According to Al-Rob, the growth reflected the dynamic economic and labor market conditions in the region. “This increase is attributed to several factors, including the labor market's robust performance, which has reached a peak unseen in the past decade, especially notable in KSA and the UAE.”

As far as bonuses, it was only 6.6% of organizations that only offer extra cash with an additional incremental salary increase. Almost half of organizations (48%) surveyed offer both annual increments and bonuses to their talent.

Study: Key trends & developments in GCC's labor market

Source: HR Trends & Practices, Annual Report 2024 from Procapita Group

The financial outlook for employees in 2024 is rosier. 83% of organizations told Procapita Group that they are planning to provide increments or bonuses this year, in recognition of good job performance and personal growth. Nearly half (47%) will provide both a salary increment and a bonus in 2024, while 17% will not provide any of the two financial incentives to their employees.

The UAE, again, leads the way with attractive compensation and benefits. It is the GCC country with the most organizations reporting that they would offer attractive increments and bonuses in 2024. In a competitive labor market with countries fighting over skilled expatriate employees, this could give the UAE a major edge.

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