Global management consultancy Hay Group says in a report released on Wednesday that the overall wage gap between UAE and Indian salaries will decline by six per cent in 2008, when compared to 2007.

According to data compiled by Hay Group, supervisory level gross salaries were 88 per cent higher in the UAE compared to India in 2005, but declined to 75 per cent in 2007 - and the consultancy is forecasting a further drop to 70 per cent in 2008, driven in part by the rising rupee.

"Companies based in UAE need to be prepared for further appreciation of the rupee and its knock-on effects. We are already seeing indications that more UAE-based Indians are considering their options back home.

"As the pay gap closes, it will be companies that offer clear career paths, attractive training programs and a strong employer brand will retain their key talent," commenting on the findings Mark Williams, director of leadership and Talent Hay Group Middle East and North Africa, said.

Around 70 per cent of the UAE workforce are Indian nationals, attracted by the significantly higher salaries on offer from UAE businesses. This makes the UAE vulnerable to wage inflation in the Indian market. "We are already seeing businesses looking to other regions for talent - such as South Africa, South America and

Asia - as it becomes harder to source high-quality talent from India," says Vijay Gandhi, Head of Reward Information Services for Hay Group Middle East and North Africa.

"In future, the UAE expatriate workforce is likely to become more diverse as employers look to increase the spread of their talent sources. More organisations are already moving

towards a 'Total Reward' philosophy; for example by offering intangible benefits such as flexible working hours to make their organisation more attractive and worthwhile place to work," he said.

The decline is also expected to affect the difference between executive level salaries, which dropped from 78 per cent in 2005, to 62 per cent in 2007, and could go down to 59 per cent this year. However, the steepest fall of 18 per cent is likely to be seen at middle management level, where the UAE salaries used to be 86 per cent higher in 2005, but are only 68 per cent greater than India in 2007.

According to Hay Group, the average annual management salary in the UAE stood at $166,700 in 2005 and increased to $194,000 in 2007. In comparison, the Indian average annual salary rose from $42,054 to $74,492 in 2007.