LONDON: Anticipated increases in wages coupled with lower rents are expected to make the UAE’s new value-added-tax (VAT) more bearable for a population used to a mostly tax-free existence, according to recruitment agents and analysts.
From Jan. 1, the Gulf state introduced a 5 percent levy on a wide range of products and services, including food, clothes and hotel rooms in an effort to create a new source of government revenue.
It is a move backed by organizations such as the International Monetary Fund (IMF), which wants to see the Gulf region diversify away from a dependency on oil.
Saudi Arabia has also introduced VAT this year, while other neighboring countries are expected to follow suit in the coming years.
While it may take some time for residents to get used to a slightly more expensive morning coffee or cinema trip, those working in recruitment say the tax will have a limited impact on the cost of living and will not immediately deter people from wanting to apply for a job in the region.
Chris Greaves, managing director for the Gulf region at the recruitment firm Hays said had been flooded with inquiries from jobseekers.
“The number of CVs we receive vastly outnumbers the number of jobs that we register, and we hear this also from employers in the region, so on the face of it there is definitely an oversupply of candidates in general. Interest in the region is definitely growing,” he said.
Expected salary hikes this year are likely to cushion the immediate impact on residents’ wallets, said Trefor Murphy, chief executive of recruitment firm Cooper Fitch, based in Dubai.
“We are probably looking at salary increases across the UAE of about 2 percent to 2.5 percent for 2018,” Murphy said.
Consultancy firm Aon Hewitt’s annual salary survey released in September 2017 forecast even higher levels of growth, predicting UAE salaries to rise by 4.3 percent in 2018.
While wages are forecast to increase, Murphy warned against companies thinking they have to give in to pressure to improve salary packages purely to offset the cost of VAT for employees.
“I’ve had 20 calls today from our clients asking us what VAT is doing, what the cost of living is doing and what the corresponding salaries look like for the year ahead,’’ he said.
“There is no justification for increasing salaries by anything at the moment. VAT is VAT and it shouldn’t impact on the business. Businesses aren’t making 5 percent more, so they can’t pay 5 percent more,” he said.
He added that the falling cost of renting or buying in the UAE — which is usually residents’ largest outgoing — will already go some way to offset the ill-effects of the introduction of VAT.
Apartment rents in Abu Dhabi have declined by 13 percent on a year-on-year basis, while in Dubai rents fell by 6.2 percent year-on-year, according to a third-quarter real estate report from JLL.
“Actually people will have more money in their pockets this year than they would have done in 2012, 2013, 2014, 2015,” Murphy said.
Sectors likely to be ramping up hiring in the coming years include consultancies, government agencies and other companies looking for tax experts and accountants to help them with the transition to charging VAT, recruiters say.
“Accountants will be rubbing their hands in glee,” said Nigel Sillitoe, founder and CEO of Insight Discovery, in Dubai.
Murphy added that the technology sector is “booming” with plenty of employment opportunities for expats.
While UAE expats’ way of life will not change for the worse overnight, there will be those asking if the VAT charge is a sign of greater taxation to come.
“There is lot of talk of what’s next? Does the 5 percent become 20 percent? All of those things have bigger impact,” said Murphy.
While noting it was too early to judge the full impact of VAT on expat numbers, Sillitoe said, “My gut feeling is that there are more people leaving than arriving — some people blaming it on cost of living and fear that VAT is just the start of other taxes being introduced.”
Commenting specifically on British expats, he noted: “Fewer friends of mine are saying ‘XYZ is moving to Dubai, can you meet them and give them some tips?’ I used to get calls like that all the time in the past but in the last year I can’t think of one — which is a sign.”
Salary hikes, lower UAE rents to take sting out of VAT
Salary hikes, lower UAE rents to take sting out of VAT
AI will never replace human creativity, says SRMG CEO
- Speaking to Maya Hojeij, senior business anchor at Asharq with Bloomberg, Jomana R. Alrashid expressed pride in SRMG platforms that had absorbed and adopted AI
RIYADH: Jomana R. Alrashid, CEO of Saudi Research and Media Group, highlighted how AI cannot replace human creativity during a session at The Family Office’s “Investing Is a Sea” summit at Shura Island on Friday.
“You can never replace human creativity. Journalism at the end of the day, and content creation, is all about storytelling, and that’s a creative role that AI does not have the power to do just yet,” Alrashid told the investment summit.
“We will never eliminate that human role which comes in to actually tell that story, do the actual investigative reporting around it, make sure to be able to also tell you what’s news or what’s factual from what’s wrong ... what’s a misinformation from bias, and that’s the bigger role that the editorial player does in the newsroom.”
Speaking on the topic of AI, moderated by Maya Hojeij, senior business anchor at Asharq with Bloomberg, the CEO expressed her pride in SRMG platforms that had absorbed and adopted AI in a way that was “transformative.”
“We are now translating all of our content leveraging AI. We are also now being able to create documentaries leveraging AI. We now have AI-facilitated fact-checking, AI facilities clipping, transcribing. This is what we believe is the future.”
Alrashid was asked what the journalist of the future would look like. “He’s a journalist and an engineer. He’s someone who needs to understand data. And I think this is another topic that is extremely important, understanding the data that you’re working with,” she said.
“This is something that AI has facilitated as well. I must say that over the past 20 years in the region, especially when it comes to media companies, we did not understand the importance of data.”
The CEO highlighted that previously, media would rely on polling, surveys or viewership numbers, but now more detailed information about what viewers wanted was available.
During the fireside session, Alrashid was asked how the international community viewed the Middle Eastern media. Alrashid said that over the past decades it had played a critical role in informing wider audiences about issues that were extremely complex — politically, culturally and economically — and continued to play that role.
“Right now it has a bigger role to play, given the role again of social media, citizen journalists, content creators. But I also do believe that it has been facilitated by the power that AI has. Now immediately, you can ensure that that kind of content that is being created by credible, tier-A journalists, world-class journalists, can travel beyond its borders, can travel instantly to target different geographies, different people, different countries, in different languages, in different formats.”
She said that there was a big opportunity for Arab media not to be limited to simply Arab consumption, but to finally transcend borders and be available in different languages and to cater to their audiences.
The CEO expressed optimism about the future, emphasizing the importance of having a clear vision, a strong strategy, and full team alignment.
Traditional advertising models, once centered on television and print, were rapidly changing, with social media platforms now dominating advertising revenue.
“It’s drastically changing. Ultimately in the past, we used to compete with one another over viewership. But now we’re also competing with the likes of social media platforms; 80 percent of the advertising revenue in the Middle East goes to the social media platforms, but that means that there’s 80 percent interest opportunities.”
She said that the challenge was to create the right content on these platforms that engaged the target audiences and enabled commercial partnerships. “I don’t think this is a secret, but brands do not like to advertise with news channels. Ultimately, it’s always related with either conflict or war, which is a deterrent to advertisers.
“And that’s why we’ve entered new verticals such as sports. And that’s why we also double down on our lifestyle vertical. Ultimately, we have the largest market share when it comes to lifestyle ... And we’ve launched new platforms such as Billboard Arabia that gives us an entry into music.”
Alrashid said this was why the group was in a strong position to counter the decline in advertising revenues across different platforms, and by introducing new products.
“Another very important IP that we’ve created is events attached to the brands that have been operating in the region for 30-plus years. Any IP or any title right now that doesn’t have an event attached to it is missing out on a very big commercial opportunity that allows us to sit in a room, exchange ideas, talk to one another, get to know one another behind the screen.”
The CEO said that disruption was now constant and often self-driving, adding that the future of the industry was often in storytelling and the ability to innovate by creating persuasive content that connected directly with the audience.
“But the next disruption is going to continue to come from AI. And how quickly this tool and this very powerful technology evolves. And whether we are in a position to cope with it, adapt to it, and absorb it fully or not.”
