Nearly half of the GCC workforce has less than US$5,000 in savings, while more than one-in-five do not save at all, according to a survey revealing the “rather low” level of savings in the region.
Expatriates living in the GCC were more likely than nationals to save and to have a larger savings pool, the survey by Towers Watson, a global professional services company, found.
But despite perceptions that residents in the GCC were good savers, the survey found nearly half of the population puts away less than 10 percent of their salary.
“This contradicts the impression that residents of the GCC save a significant proportion of their income and is surprising given the prolonged global economic uncertainty,” the report says.
The GCC savings rate – 15.37 percent – is significantly lower than countries such as China (27 percent) and India (22 percent).
The rate among GCC expats is higher at 16.89 percent compared to nationals at just 12.27 percent.
About 13 percent of the 2,600 employees who responded to the survey said they had US$5,000-10,000 in savings, while another 10 percent had between US$10,000-20,000.
One-third of the GCC population has more than US$20,000. However, the rate is much higher for expatriates, at almost half.
Housing (25 percent) was the main motivator to save, followed by the desire to have precautionary savings (19 percent).
Expats also were concerned about putting money aside for their children’s education (21 percent), with this reason rated three times more important than for nationals (7 percent).
Younger respondents (aged 20-29) were highly motivated to save for their wedding (25 percent), as well as housing (23 percent) and precautionary (17 percent).
Older people used their savings for children’s education (24 percent), a rainy day (22 percent) and retirement (17 percent).
Wealth accumulation (10-12 percent) also was a key motivator but retirement was seventh on the list of motivators, with just 7 percent of respondents listing it.
“This suggests that retirement is not an immediate worry for employees and comes only after more current concerns,” the report says.
The CEO of National Bonds, the Dubai-owned Islamic savings scheme, has previously expressed his concern that UAE residents are not saving enough money for their future.
The scheme’s savings index, which measures saving sentiment in the Gulf state, had seen only a “slight increase” during 2012, while there had been a 3.4 percent increase in the number of people investing in National Bonds in the first half of 2012 compared to the previous year.
National Bonds CEO Mohammed Qasim Al Ali said the vast majority of residents still do not save enough.
“A lot of people, unfortunately, in this part of the world, they live pay cheque to pay cheque and that needs to change,” he said. “We cannot work alone; the government intuitions have to play a role [and the] education system has to play a role.”