MANAMA: With 84% of GCC residents believe that their savings are not adequate for their future, around 30% of the GCC citizens save nothing, according to the findings of the latest study by Takaud.
Takaud, the first of its kind company providing pensions and savings tailor made solution to both individuals and the corporate, conducted extensive research in Bahrain to understand the saving and investment habits of the employees.
The findings revealed that an alarming 75% of those surveyed were not saving enough to support themselves and their families in later years.
The implications of this non-existent ‘savings culture’ with an average life expectancy of 85 years old is the creation of a savings ‘time bomb’ for the region which will have major repercussions.
“As the MENA region’s specialist savings and pensions provider, we understand the importance of engaging with the community through research and development. We are pleased to learn that most companies in our primary market, Bahrain, understand the importance of Employee Savings Schemes within their wider remuneration strategies. Through implementing well-structured and personalised savings solutions, more companies are conforming to global best practice and helping their employees achieve their goals,” Takaud’s acting CEO, Eric Van Biesen, said.
Building on this research, in April 2014 Takaud completed a survey of Bahrain’s employers to find out what effect this had on their businesses.
Over 90% of the sample of companies surveyed understood the importance of being involved in not just the welfare of their employees but their families too.
Employers that support their staff and their families will always generate a more ‘fierce’ loyalty that employers who do not. Key techniques such as Employer Savings Schemes have shown consistently time and again that they help retain a company’s employees for longer, reduce aligned staff turnover costs and in turn boost both business performance levels and wider profitability.
71% of respondents advance salaries to employees, or otherwise loan them money.
The cost of advancing salaries to staff is a significant expense for a company and it is a non-productive use of their working capital and financial resources. Moreover, it suggests that employees in Bahrain have few places to turn when managing their finances. The long term answer is for employees to build up their own financial buffer – and from there achieve financial independence.
With little existing savings, the only way forward is to get staff to get into the habit of saving through Employee Savings Schemes regularly.
“93% of companies surveyed understood that Employee Savings Schemes are important to strengthen employee motivation in the workplace.”
“Unmotivated employees are less productive and change jobs more often. The cost of replacing an experienced employee for example can be an additional 90% to 150% of their annual salary when one factors in the loss of revenue, aligned advertising and training costs for the recruitment of each new employee,” Mike Lonergan, Regional Corporate Sales Director of Takaud, told the media roundtable on Tuesday.
“73% of companies surveyed agreed that companies should contribute towards staff savings programmes.”
“This is a significant piece of news and would help create a much needed savings culture in Bahrain for employees as well as across the GCC which suffers from the same issues. For example 64% of GCC citizens save less than a fifth of their monthly income and 84% of GCC residents believe that their savings are not adequate for their future.
“It would also provide employers with the ability to recruit, reward and retain valuable staffs, which are needed to grow their business. Currently the average employee in the MENA region changes jobs every 5.2 years, less than half the time on the job compared to France, Germany and the Netherlands, where employees remain in jobs on average 11.7, 11.2 and 10.6 years respectively.
“Takaud represents region’s one of heavy weights called Kipco with $30 worth of assets and will stay in the region unlike some other players coming from outside and left the region,” Ebrahim K. Ebrahim Chief Marketing and Communications Officer of Takaud said while responding to a question.
“We have individual plans and corporate plans aimed at serving the broad segment of the society by utilising the best expertise put together by Takaud,” he added.