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Do bankers deserve to earn more in the Gulf?
5 August 2008
What with tax-free salaries and fierce competition for talent, the GCC is fast becoming a location of choice for Western bankers. But pay is fast being eroded by spiralling inflation. Should banks in the Gulf increase pay accordingly?
For bankers based in the GCC, the most obvious answer is yes.
Before tax, bankers in the Gulf are still a lot worse off than their Western counterparts. A salary survey by recruiters Charterhouse Partnership suggests that the average analyst investment banker will earn around $65k in the UAE. Meanwhile, US peers can expect $60k-$70k in the first year, rising to $70k-$80k and then $80k-$90k, according to search firm The Options Group.
At the senior end the difference is more pronounced. An MD in the Gulf will haul in an average $343k in the UAE. London counterparts will take home £270k ($540k), according to a Robert Walters salary survey.
When tax is taken into consideration, the GCC bankers at the lower end are actually better off. An analyst earning $80k in the US would take home $65.1k. While an MD (on the higher tax bracket) will only be marginally better off than those in the GCC – earning a net $374k.
Still, headhunters tell us that Western bankers are increasingly refusing to take a lower gross salary in the Gulf, in spite of the tax-free benefits.
It’s also questionable whether GCC-based banks can afford to pay up. A survey by Hewitt Associates says that salaries now make up 60% of their operating costs.
Should local pay increase in line with inflation? Or do GCC bankers already earn too much?
There is a special situation in the Gulf now. These people dream of becoming some serious player in finance, there is actually lots of money and they need people to make this money grow; they lack the talent, they claim they want the best; hower, inflation is super high, rents are simply..unacceptable particularly in Dubai, Abu Dhabi and Doha; the region undeniable provides no culture, and a lower lifestyle, then what is the magic word if you wan to keep the best????? is that so hard? Oh, and did I mention there is a huge shortage of real professionals in Finance and banking for example, and HUMMMM did I also mention that there is discrimination; suddenly and European comes making USD150K for an Associate position, but wait! his Indian or Pakistani or Arab colleague next cubicle making USD50,000 a year for the same job! MMMM or Finally, did I also mention that this a place wants to compare to London, NYC or other first-grade world Financial Centers, maybe, but what is the magic word again?????????
Mr. Nerdy 26 Aug 2008
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