Currency conversion rate change sows seeds of discontent among UAE staffers
Spare a though for staff at international firms working in the United Arab Emirates. Those who moved to the area in 2007 would have received around 7.7 dirham for each pound sterling they earned, compared with some 5.8 now.
No wonder employees would rather be paid in the local currency. The five-year decline in the pound against the dirham means those who were paid in sterling are significantly worse off.
Associates at Norton Rose have pondered over the years whether they would be better off if they were paid in dirham, although a source connected to the firm said the system is pretty fair. Legal staff in Dubai can take a proportion of their salary in dirham and the rest in sterling. Support staff who are hired locally, meanwhile, are paid in the national currency, but it is thought that most lawyers choose pounds.
Norton Rose is understood to use an average rate for conversion rather than the spot rate favoured by some. US firms pay in dollars, but as that currency is pegged to the dirham there is no effect.
The argument from the partner perspective is that sterling salaries create stability. Staff were not always better off being paid in dirham – the sense among Norton Rose staff that they would be only came after the pound’s decline.
Conversion rates aside, a highly scientific investigation using numbeo.com shows the cost of a bottle of water is 71 per cent lower in the UAE than in the UK, while a litre of petrol is 75 per cent cheaper. Whatever the pound-to-dirham rate, life is cheaper in the Emirates.