UAE's private sector employees to get inflation-beating salary hikes

Employees in the UAE and the region can expect pay hikes of between 4.7 and 6 per cent in 2016.

The latest forecast comes from Towers Watson’s salary budget planning study, which shows that average pay hikes outweigh regional inflation rates, giving employees real increases in their wages.

The study primarily covers employees in the private sector.

Increments are expected to reach 5 per cent next year for employees in the UAE, Kuwait, Oman, and Qatar, while Jordan and Lebanon employees will enjoy average pay rises of 6 and 5.8 per cent, respectively.

Bahrain will have the lowest increases of 4.6 per cent, while in Saudi Arabia, average hikes will be 5.5 per cent.

“Middle East employees can expect a steady rise in their incomes, with most countries in the region expected to have similar pay rises next year as in 2015,” says Laurent Leclère, Senior Consultant and Data Services Lead for the Middle East at Towers Watson

The outlook for the Middle East region next year is very similar in terms of wage rises but inflation is anticipated to rise compared to 2015, hovering at around 3 per cent.

Who is in line for the maximum pay-hike in UAE?

Tower Watson’s estimates show that sectors that will see a higher salary rise in the UAE in 2016 compared to this year are financial and professional services, as well as energy and natural resources.

Most companies plan to allocate the larger portion of their salary increase budget to high performers, while a few plan to share the budget allocated to all employees at same rate, it says.

Oman will witness the lowest inflation rate in the region, of only 1.8 per cent, while Saudi will have the highest, at 3.5 per cent.

Only the UAE is expected to have a lower inflation rate next year, at 2.7 per cent, down 1 per cent from 2015.

This means that while UAE employees will receive inflation-beating pay-hikes, actual income rises will feel much lighter.

“Next year, the real rise in their income might feel slightly less than this year due to the growing inflation rates in the region,” maintains Leclère.

In Bahrain and Qatar, the average inflation will rise slightly, to 2.5 and 3 per cent respectively, whereas Jordan and Lebanon will see a steep rise by almost 3 per cent, from a negative inflation this year, which means the wage rises in real terms will feel lower, as per Tower Watson.

How much did UAE employees get this year?

The UAE hikes are in line with the projections made in a previous survey by human resources consultancy Aon Hewitt, which said UAE firms project a 5 per cent increase in pay in 2016, up from the 4.8 per cent projection made for 2015.

In terms of actual increases for 2015, the UAE recorded a 4.8 per cent increase.

For the GCC, Aon Hewitt expects pay hikes will average 5 per cent in 2016, down from an anticipated 6 per cent in 2013, 5.5 per cent in 2014, and 5.1 per cent in 2015.

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