The Reality of the US Dollar and Salaries in Dubai
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The Reality of the US Dollar and Salaries in Dubai
Almost the end of the year and as I keep track of my earnings and outgoings, here is a reality check for anyone interested in a Middle East job. I’ve been here for 9 years so this does not include the big expenses involved in relocating.
In Dirhams I earned 7.8% more than 2002. This was due to a 3% step in salary and a generous bonus from the company (8 weeks - Thanks). However in Euros I earned 13% less. This was worked over an average exchange rate for each year. If calculated on December’s rate to the previous year average it would be 17% less
With regards to expenses, we made a conscious effort to cut back - less non-essential toys, less eating out, no club membership (thanks to EPC!), minimal house help etc. After this total expenses rose 5%. However when examining the last quarter this was in the order of 9%
Some interesting things regards to where the money went. 8% on education – that is, paying for 2 kids’ education shortfalls, extracurricular activities etc. Supermarket bills up by 11% over the year, again mostly in the last quarter.
My provident fund has broken even with a good year compared to the previous bear market. It gained almost 27%. However ignoring contributions this year, the money in the fund showed a 1% drop against the Euro. It would have been better off under a mattress – however that’s not one of the funds options.
Property here has hardly risen in Dirham terms for houses over the past year. Possibly some increase for apartments. In Euro terms this is a loss particularly if 10% of the price was imported for the deposit. There are fears of an overcapacity in accommodation. The pros and cons of property in Dubai I’m not qualified to comment on.
The squeeze is on in other areas too as everything from basic salary, to untimely death/disability benefits are effectively reduced against other currencies. Even private insurance schemes all paid for in other currencies delve deeper into pockets.
Finally the big reason we are all here - disposable income or savings. I saved less in Dirhams this year. Not by much - 0.5%. However adjusted for Dubai inflation, that’s a lot less. Almost everything here is imported from Europe, Asia or Australia/NZ. Curiously even the American imports climb as these are affected by Dubai’s own inflation which is a relatively high by-product of its own success and growing business and tourist profile. In Euro terms savings were 20% less which figures, looking at the last year USD/EUR.
The Economists vary on how much further the US dollar will fall. Some estimates are downright scary. However they do agree the fall will continue as the dollar is overvalued and America deficit is huge. Furthermore there is no recovery forecast but rather a stabilisation at the adjusted level as the US takes its place amongst other rapidly growing economies. They say it’s a good thing for the world economy. Sure isn’t much good for me – I don’t plan to live in the USA. Guess I’ll spend more time out here where the sun shines – permanently.
In Dirhams I earned 7.8% more than 2002. This was due to a 3% step in salary and a generous bonus from the company (8 weeks - Thanks). However in Euros I earned 13% less. This was worked over an average exchange rate for each year. If calculated on December’s rate to the previous year average it would be 17% less
With regards to expenses, we made a conscious effort to cut back - less non-essential toys, less eating out, no club membership (thanks to EPC!), minimal house help etc. After this total expenses rose 5%. However when examining the last quarter this was in the order of 9%
Some interesting things regards to where the money went. 8% on education – that is, paying for 2 kids’ education shortfalls, extracurricular activities etc. Supermarket bills up by 11% over the year, again mostly in the last quarter.
My provident fund has broken even with a good year compared to the previous bear market. It gained almost 27%. However ignoring contributions this year, the money in the fund showed a 1% drop against the Euro. It would have been better off under a mattress – however that’s not one of the funds options.
Property here has hardly risen in Dirham terms for houses over the past year. Possibly some increase for apartments. In Euro terms this is a loss particularly if 10% of the price was imported for the deposit. There are fears of an overcapacity in accommodation. The pros and cons of property in Dubai I’m not qualified to comment on.
The squeeze is on in other areas too as everything from basic salary, to untimely death/disability benefits are effectively reduced against other currencies. Even private insurance schemes all paid for in other currencies delve deeper into pockets.
Finally the big reason we are all here - disposable income or savings. I saved less in Dirhams this year. Not by much - 0.5%. However adjusted for Dubai inflation, that’s a lot less. Almost everything here is imported from Europe, Asia or Australia/NZ. Curiously even the American imports climb as these are affected by Dubai’s own inflation which is a relatively high by-product of its own success and growing business and tourist profile. In Euro terms savings were 20% less which figures, looking at the last year USD/EUR.
The Economists vary on how much further the US dollar will fall. Some estimates are downright scary. However they do agree the fall will continue as the dollar is overvalued and America deficit is huge. Furthermore there is no recovery forecast but rather a stabilisation at the adjusted level as the US takes its place amongst other rapidly growing economies. They say it’s a good thing for the world economy. Sure isn’t much good for me – I don’t plan to live in the USA. Guess I’ll spend more time out here where the sun shines – permanently.
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Pixy, I guess it's the wrong time to be in a country which pegs its currency to the dollar! However, it is very cyclical, and you may find that things are back in your favour by the time you plan to leave.
I arrived in the UAE in October 1984, when the rate was about $1.25 to £1. By February 1985, it had fallen to $1.09 to £1, and I thought I had found a gold mine! Sadly (for me), it soon rose again and, by July 1987 when I left the UAE, it stood at $1.62 to £1, so all my dreams of a contract end windfall came to nothing. Since then, it has varied from a "high" of 1.96(Feb '91) to a "low" of 1.40(Jun '01). 1992 was the "manic" year, with rates ranging from 1.52 to 1.94!
Sadly, can't see the UAE removing the peg against the dollar any time soon.
However, the FT predicts a forward rate of 1.69 for a year's time, against today's rate of 1.74. 
PS. Not sure why you are using the Euro as an exchange indicator, if you are UK based. The £/$ rate this year has ranged from 1.58 at the beginning of January, to 1.69 at the beginning of December. This represents about a 7% "weakening" during the year.
I arrived in the UAE in October 1984, when the rate was about $1.25 to £1. By February 1985, it had fallen to $1.09 to £1, and I thought I had found a gold mine! Sadly (for me), it soon rose again and, by July 1987 when I left the UAE, it stood at $1.62 to £1, so all my dreams of a contract end windfall came to nothing. Since then, it has varied from a "high" of 1.96(Feb '91) to a "low" of 1.40(Jun '01). 1992 was the "manic" year, with rates ranging from 1.52 to 1.94!
Sadly, can't see the UAE removing the peg against the dollar any time soon.
However, the FT predicts a forward rate of 1.69 for a year's time, against today's rate of 1.74. PS. Not sure why you are using the Euro as an exchange indicator, if you are UK based. The £/$ rate this year has ranged from 1.58 at the beginning of January, to 1.69 at the beginning of December. This represents about a 7% "weakening" during the year.
Last edited by newswatcher; 10th Dec 2003 at 23:16.
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You are not the lone ranger in looking at how much you are earning compared to where you expect to end up (let's face it, there aren't many planning on retiring here, are there? Most people I know are here for a relatively short time to make some bucks and get ahead- compared to "home". {I realise pilots may have longer stints planned}). I work with lots of guys scratching their heads and doing the sums. Sth Africans, Australians etc are about 30% down if you are talking about shipping the money home at the end of your stint. Really thrown a spanner in the works for a lot of guys who had short horizons. The only plus is that there hasn't been a mass exodus (are you earning enough to make it worth while being here?) because of the savings/provident being in USD.
Spare a thought for those of us who don't reap the windfalls of the climbing traffic levels. No annual bonuses for us.
Pixy; concur fully. I reckon the pain aint over yet.
Spare a thought for those of us who don't reap the windfalls of the climbing traffic levels. No annual bonuses for us.
Pixy; concur fully. I reckon the pain aint over yet.
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Canadian Currency?
Tell me...the pilots hired from Canada...are they paid with the Dirham tied to the Canadian dollar? Basically, how is the pay calculated for Canadian pilots?...anyone?
tks
tks
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Still come up with the same.... 50% of the salary is still exchangerate protected to an average rate over 5 years rolling. Max I think i 2500 DHS....
I get about 1700 DHS extra a month.....
so... as I said enlighten me again....
I get about 1700 DHS extra a month.....
so... as I said enlighten me again....
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Logic, Payscale, logic.
You are stating the rules but not the reality. For a theory to be a fact it has to hold true in every case.
You make some large assumptions.....
Check the facts....
You are stating the rules but not the reality. For a theory to be a fact it has to hold true in every case.
You make some large assumptions.....
Check the facts....
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The Exchange Rate Protection is an allowance applied to half your base salary to counter for undesirable movements in your home currency. Given that most expats are buying assets outside Dubai, this helps to pay the shortfall when their home currency rises against the AED (Or US$ as they are pegged).
Unfortunately, it is capped to be a maximum of 15% of your salary. Hence as my salary has gone backwards ~40% in my home currency terms over the last year I am only down by 25%. Good really, isn't it?
Edited because I can't spell!
Unfortunately, it is capped to be a maximum of 15% of your salary. Hence as my salary has gone backwards ~40% in my home currency terms over the last year I am only down by 25%. Good really, isn't it?
Edited because I can't spell!
Last edited by RolandPullthrough; 18th Dec 2003 at 15:16.
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Yes good while it lasts.
Gulf Air had a fully protected exchange rate salery scheme for Brits and Aus pilots for a short while.
When it started to cost them....... suprise...... they cancelled it.
Gulf Air also had a provident fund and...suprise..... they cancelled it.
Gulf Air also hired DE L1011 Captains and only promoted national Fo pilots...suprise.... they lost 80 Expat First Officers and suprise...they stopped this policy.
I sometimes think Emirates management is determined to make every mistake that I saw Gulf Air make regarding its pilots.
Gulf Air had a fully protected exchange rate salery scheme for Brits and Aus pilots for a short while.
When it started to cost them....... suprise...... they cancelled it.
Gulf Air also had a provident fund and...suprise..... they cancelled it.
Gulf Air also hired DE L1011 Captains and only promoted national Fo pilots...suprise.... they lost 80 Expat First Officers and suprise...they stopped this policy.
I sometimes think Emirates management is determined to make every mistake that I saw Gulf Air make regarding its pilots.
