Qataris Get a Raise

Just got back from a five day vacation to... well, I'll get to that in another post. The last month has been nothing but travel posts so it's time to get back to discussing Qatar.

Recently the Qatari Government announced big salary increases for Qataris working in the civil service and military. The increases ranged from -- are you ready? -- anywhere from 50% to 120%. No, no typos there, fifty to one-hundred-and-twenty percent. Wow!

Needless to say His Highness the Emir was greatly thanked for his generosity. Even better, the raises also extended to retired civil servants on a pension. (I suspect this was the group His Highness really wanted to help, a fixed pension doesn't go far when inflation is 15 to 20% a year)

As an aside I will take this moment to restate something I said back in March: Qatar is not undergoing any unrest or revolution. Qatar has not had any trouble. There will be no Egypt-style protests. Qatar is safe and stable. (And this was before giving out massive raises to most of the citizens!)

Now from what I've been told, despite what a lot of ex-pats think, the salaries in a lot of government jobs was never huge to begin with. In some junior level positions I believe the raise will amount to around $1500 a month but that's definitely better than nothing. Government jobs tend to be attractive not so much because of the salary but because of job security, and with great benefit packages and pensions. Some Qataris I spoke to who work in the private sector noted that they made more in the private sector than in the government sector. Well, at least before the raises were announced.

I also like that while the Government is trying to share its vast wealth with its citizens it's trying to target the working population. You're independently wealthy and don't work? No raise for you. You work for the Government to make a living and support a family? More money for you. No money for deadbeats.

There have been a few problems, or possible problems, that occurred because of the raises:

1) an obvious one is that Qataris who work in the private sector received no benefit, which of course has put the private sector in a difficult position. The private sector struggles sometimes to attract Qataris as they prefer to work for the Government, and with the raises that makes it even more challenging. Private companies also try to comply with “Qatarization” regulations which mandate a minimum percentage of Qatari employees. Many companies have had to match the raises if only to retain their existing Qatari staff.

One comment I read on the issue raised a good point. The person didn't have an issue with Qataris receiving raises as long as the Government realizes that by doing so it becomes even more difficult for companies to hire Qataris. Thus the Government shouldn't therefore be surprised if Qatarization targets are not being met, or that there is increased demand from Qataris for employment in the civil service. You can't give 50+% raises and then wonder why companies are struggling to hire Qataris. This may also lead to an increase in a strange phenomenon I refer to as "Rent-a-Qatari" -- a company agrees to pay a Qatari a small salary just so they can say that they have a Qatari “employed” there, yet the Qatari never has to show up. (You also find similar Rent-an-Emirati schemes in the United Arab Emirates)

2) It impacts how expensive Qatar becomes to do business, again because of item 1 above, which may ultimately impact economic development to some degree as companies decide to set up elsewhere. It is unlikely that a company will use Qatar as a regional hub for its business if it is more expensive than other areas in the Gulf. If the cost becomes prohibitive enough businesses will only set up here if they need to do business in Qatar itself.

3) Finally, and some Qataris warned me about this but I didn't think this would happen, instant inflation. Prices went up in some shops and restaurants immediately after the announcement. Given that Qataris only make up 15% of the population, so I figured the raises only applied to about 5% of the total population of the country, I didn't think some stores would immediately raise prices. Apparently some did. There have been calls for the Government to take action against these enterprises but in the meantime a grassroots boycott-movement, spread mostly through texting and messenger, identified businesses that raised their prices and asked Qataris to boycott them. It apparently has had an impact on some businesses such as restaurants but there are also concerns that some people are taking advantage of the situation and deliberately naming innocent stores in order to hurt their business. If the price increases become widespread this will become an issue for a lot of non-Qataris as they have not received any salary increases and in many cases are on a limited income in an already expensive country. Time will tell.

No, no raise for me either. Would be nice.