Don't expect Gulf to be sheltered from bonus cuts

With bonus season well and truly upon us, it's time to reflect whether the GCC really does offer bountiful payouts in the face of a financial crisis. The evidence would suggest not.

Last year, research by executive search firm the Options Group predicted that Dubai bonuses could fall by 15% on 2007, but added the caveat that they could, in fact, fall by a lot more than this.

Worse case scenarios now appear to be coming into play. Headhunters Heidrick & Struggles have released their snapshot of bonus payouts, suggesting they'll be down by an average of 30-50% this year, and the Middle East is unlikely to be immune to this slump.

Ian Giulianotti, associate director, HRM Consulting at Nadia Recruitment, is very pessimistic: "I expect no bonuses this year in the banking sector and if they are paid any it will be very small."

Noha El Shazly, country managing partner for UAE, Egypt and Lebanon predicts an end to the sign on bonuses that were becoming ubiquitous in 2008.

Slumping bonuses may be down to the fact that investment banking revenues in the region continue to plummet.

Investment banking revenue was $20m in January, according to figures from Dealogic compiled for Financial News. This marks a dramatic fall from its peak of $130m in September last year, but an upturn from the low of $8m recorded in November 2008.

Both El Shazly and Giulianotti are relatively upbeat when it comes to salaries, however.

El Shazly says salaries are unlikely to jump 30-50% as in the past, but they're likely to remain stable.

"It is highly unlikely that people working in this sector will take any salary cuts," says Giulianotti.