Employees in the United Arab Emirates can expect a 4% salary increase in 2022

Employees in the UAE will on average enjoy a 4% salary increase this year, according to the latest estimate from HR consultancy Mercer.

Each year, the global human resources consultancy solicits human resources managers in the United Arab Emirates for their views on the labor market, including compensation and benefits.

Asked about the salary increase planned for 2022, executives said the annual increase would average 4%, above the salary increases of 3.6% and 3.8% granted respectively in 2021 and 2020, but still below the pre-pandemic level (4.5% in 2019).

“This year’s study shows positive sentiment toward salary increases, but not quite at pre-pandemic levels,” said Ted Raffoul, career products manager at Mercer.

Meanwhile, overall, a large portion of employees will fare better in 2022 than in previous years. In 2020, 14% of companies froze salaries for their employees, a number that fell to 10% in 2021. “This year, we expect only 5% of companies to freeze salaries,” Raffoul said.

From a sector perspective, companies in life sciences, food and beverage manufacturing, and consumer goods are expected to leverage their strong performance during the pandemic to outpace wage growth, while technology and energy industries will, according to Mercer’s findings, lag slightly at 3.5% and 3.4% respectively.

An essential hike?

The higher salary increases are partly necessary to counter growing competition for talent. McKinsey & Company research from late last year warned of a looming ‘high retention’ crisis, with many professionals who had been in place for a long time now wanting to move on, while many more are planning to capitalize on favorable employee market conditions.

“Our survey shows that hiring is on the rise due to the promising economic recovery in the UAE, with companies saying they intend to hire for more new roles than in 2020. This rebound is changing the talent landscape , employees having more options,” Raffoul explained.

Andrew El Zein, Partner at Mercer, added, “Signs of growth are evident in the increase in hiring activity we saw in 2021 and the positive outlook for 2022. Employers are prioritizing hiring for in-demand skills that will support future business growth. the talent pool continues to expand, causing a kind of talent war.

As a result, “employers are rapidly reorienting their compensation and benefits strategies to attract and retain top talent,” El Zein said, with salary forming an important part of that equation.

Other elements receiving more attention include flexible work models, long-term incentive plans (especially for executives and talent with experience in specialized areas), and compensation programs that align more closely with skills (known as skill pay, which introduces a clearer link between wage development and skill progression).

HR managers from nearly 600 organizations in the UAE participated in Mercer’s survey.

William M. Mayer