Why are Salary Structures in Middle East Differentiated by the Nationality?

The first thing I heard when I came to Dubai was that some organizations have multiple salary structures. I was amazed by this!

I thought that “Whoa, they are really advanced in segregating job groups or different business lines for the respective market!”

That was not the case. The segregation was according to your origin, i.e. Locals, Western Expatriates and Eastern Expatriates…

My initial thought was that it was pure discrimination and I wanted to dig deep to come up with a meaningful rationale why man should create such an aggressive differentiation. After spending some hours, I listed (almost) every major possible reasons:

  • Most of the countries in this region (especially UAE, Qatar and KSA) lack local talent.
  • They need not only skilled labor but also unskilled ones to handle productive and administrative work and the local population is unable to cover such enormous workforce requirement even if all would have worked.
  • The global mobility theories work. Hence they do not have a robust know-how, they require importing the experts from more developed markets.
  • Cost management is another reason. If you need one million of blue collar workforce and your only chance is to have foreigners work, you would go to the destinations where you can attract most people with least cost.

When you look at the reasons above, it seems fair enough to differentiate your employee groups in such a way that it might be considered in other parts of the world as “discrimination and inequality in the employment”.

Most of the multinational companies do not choose to have this practice because they are subject to audits in U.S. or Europe because of their presence in those areas and they are of course accountable for their overseas operations covering this region.

Now, clarifying the situation a little bit more the question stays the same: Is this practice fair or not?

If we would live and work in U.S.A or Europe., most probably it’s a clear violation of FLSA, EPA 75/117/EEC. With ongoing enhancements in laws and regulations in Middle East, our question would be still legally debatable and the reasons listed above will be brought up in every discussion on this topic to defend the practice.

Personally, I wouldn’t choose to have such a practice but after considering the valid reasons specific to this region I do not criticize who does.

P.S.: I’d like to have comments on this issue from people who have been involved in such a practice and discuss further.

Original post was published on Linkedin on August 12th, 2014.

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