UAE firms face talent crunch, but why still no pay-hikes for staff?

The market follows rules of demand and supply but employers in the UAE may be just going around it.

Despite shortage of talent reported by most sectors in the country, employers are neither giving any substantial pay hikes to existing employees to retain them nor are they offering bigger amounts to entice new candidates.

According to the 2015 salary guide by recruitment firm, Robert Half, the UAE employment market continues to thrive and demand for specialist occupations far outweighs supply, resulting in talent shortages across the region.

However, despite all the challenges faced in recruiting staff, salaries for professional roles in finance and accounting, financial services, information technology, legal, HR and administration rose on average by 2 per cent over the past 12 months, compared to the current rate of inflation of 3.1 per cent (October 2014).

Compounding hiring challenges is stronger employment prospects in the UK and US resulting in fewer expatriates to the region.

“With hiring returning to pre-recessionary levels, businesses are feeling the talent crunch and are struggling to source the staff they need to leverage sustained growth in the region. Despite strong demand and short supply, companies are still only offering modest salary increases and are finding that they are unable to attract the right talent to fill critical roles,” says Gareth El Mettouri, Associate Director, Robert Half UAE.

“Businesses still hope that expatriate recruitment will bridge the talent shortfall, but this is proving challenging as global economies improve and many of the professionals who were attracted to the Middle East during the downturn are finding appealing opportunities at home. Firms are stepping up efforts, conducting remote interviews and accommodating relocation efforts while others are making offers within weeks of an expatriate’s arrival,” he added.

A previous report by Aon Hewitt, a company into talent, retirement and health solutions says the pay hikes in the country next year are just going to be very nominal.

The company says employers in the UAE are predicting an average salary increase of 4.8 per cent in 2015.

The figure is slightly down from forecasts made in 2014 and 2013 which was 5.1 per cent and 5 per cent respectively, indicating that companies across the UAE are being slightly more conservative with their budgets.

However, employees in the UAE were given an average salary increase of 4.6 per cent in 2014, only slightly below the original projection of 5 per cent.

Across the GCC, companies are predicting an average salary increase of 5.1 per cent for 2015.

Among the participating GCC organisations, Oman and Saudi Arabia-based companies gave the highest salary increase projection for 2015 at 5.4 per cent each; a slight decrease from the 2014 predictions.

Bahrain gave the lowest salary increase projection at 4.5 per cent, followed by Qatar at 5.2 per cent and Kuwait at 5.3 per cent.

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