Critics censure Gulf public sector largesse - FT.com

Soaring public sector wages in Gulf states risk undermining private companies’ efforts to deepen investment in the region and create badly needed jobs for nationals. That is the view of leading bankers and the International Monetary Fund.

Simon Cooper, chief executive of HSBC Middle East and north Africa, says that “unprecedented” salary rises of up to 60 per cent in some countries’ state financial institutions are making it harder for banks to attract and retain talented local workers.

His comments show how rich petro-states face a dilemma as they grapple with the unrest sweeping the Arab world: their desire to keep people happy with financial largesse on the one hand, balanced by a need to diversify economically for a post-oil future.

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