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02 March 2024

UAE residents face lowest pay hikes in five years

By Shuchita Kapur

As the New Year energy fades out, employees in the UAE are faced with lowest potential pay hikes over a five-year period.

According to the just released Mercer Middle East’s 2015 Total Remuneration Survey, salary increase forecasts for 2016 in the UAE and Qatar are now recorded at 4.9 per cent – a figure below 5 per cent for the first time in five years.

In Saudi Arabia, increases are expected to hover around 5 per cent, much lower than the average 6 per cent seen in the past years.

Several recruitment specialists in the UAE have taken a similar cautious outlook, estimating the pay hikes in store for UAE employees will be below or just around the 5 per cent-mark.

For example, Towers Watson’s salary budget planning report, shows that UAE and GCC employees are set to get a pay rise of an average 4.8 per cent in 2016.

This marks a return to 2014 when the pay hikes were the same and is expected to be marginally lower than 2015.

Consultancy Aon Hewitt, however, predicts that 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.

Keeping in line with the salary predictions, Mercer also reveals the same sentiment when it comes to hiring.

The survey shows that 71 per cent of UAE organisations interviewed in 2014 stated they planned to increase headcount in 2015, but when asked the same question earlier this year, only 57 per cent said of any hiring plans.

“It is clear that 2016 is likely to be characterised as being a year of restrictions, caution and a focus on improved efficiency from an HR, compensation and benefits perspective. Companies are looking to introduce new and interesting approaches to rewards, and benefit from the macro-economic environment to make necessary or desirable changes,” said Nuno Gomes, Principal – Information Solutions Business Leader at Mercer Middle East.