UAE salary forecast 5% pay hikes this year: report

Employees in the UAE are not in line for any big pay hikes next year. Increments are expected to be nominal and slightly lower than what has been predicted for 2015.

According to the latest Towers Watson’s salary budget planning report, UAE and GCC employees are set to get a pay rise of an average 5 per cent in 2015 and going forward this too is expected to dip to 4.8 per cent in 2016. This marks a return to 2014 when the pay hikes were the same.

“Overall, the year 2015 may not see any big increments or fat bonuses and those working in the UAE may have to contend with a marginal pay hike just enough to keep up with the inflation rate in the country,” says the report.

Earlier predictions by other recruitment agencies put the pay hike for this year in the same band. Morgan McKinley's 2015 UAE salary guide, predicts a 5 to 6 per cent pay hike, which is lower than anticipated earlier due to falling oil prices.

A previous report by Aon Hewitt, a company into talent, retirement and health solutions shows the pay hikes in the country are going be less than the 5 per cent mark. The company says employers in the UAE are predicting an average salary increase of 4.8 per cent in 2015.

The Tower Watson report highlights that disposable income of employees is likely to go down in the near future and workers at all professional levels are likely to feel the increasing financial burden.

This is “against a distressing inflation rate in the UAE, expected to rise by 3.1 per cent in 2016 and hitting a 6-year high earlier this year on rising housing and utility costs”.

“Across the Middle East and Africa, our research reveals that salary budgets are now being set with less and less connection to the consumer price index than they might have been in the past. Pay growth is now being driven by the bigger picture; factors such as the competition for talent, growth expectations and also the shifting weight of base salary or guaranteed cash within the overall reward package against other elements such as car allowances and performance-related bonuses. In the Middle East, allowances are very prevalent and can be a substantial portion of the reward package,” says Laurent Leclère, Senior Consultant and Data Services Lead for the Middle East.

“Pay together with career growth opportunities remain the main factors in attracting and retaining talents. In the absence of a tendency of wage growth in the UAE, the challenge is working out how to use the salary budget more effectively to ensure sufficient recognition for top performers or those with critical skills, where the market might be moving at a faster pace. It really comes down to segmentation and differentiation and presenting a bigger slice of the reward pie to key members of staff that companies want to secure for the long-term,” he adds.

Print Email