Celebration Time – 6% Pay Increases on Their Way?

Giving a whole new meaning to “waiting to exhale” UAE residents can start to breathe a little easier as they celebrate the end to pay freezes.   An average of 6% increases over the next 12 months is expected for many UAE employees. But are they starting the celebrations a little early?

While this is all based on surveys, there remains a chance that these increases may be on the horizon. Leading recruiter Robert Half UAE is decidedly more conservative in validating those projections. The consensus however is that pay increases are eminent – for those who out-perform.

Those who have consistently demonstrated technical competency and measurable outputs are the ones most likely to benefit and secure pay raises. Other considerations will factor in, such as time since last raise, professional conduct, tenure and longevity as well as willingness to learn new skills and advance. The bottom line is: You must out-perform your colleagues.

New recruits are benefiting from this – HR directors are once again open and more negotiable during the interview process to discuss compensation. It is now quite appropriate, and acceptable, to discuss compensation when applying for a role or during the initial interview.

In light of the rising costs of living, salary increases are not keeping up. Prior to the financial crisis of 2008, typical salary increases in the UAE typically increased by double digits, 12-13% year over year. Since 2010, the average increase has hovered at 5%. Employees are opting to move between companies to negotiate higher salaries. The more aggressive and successful businesses can afford to offer better compensation in an effort to recruit the best talent. The competition for talent is on the rise.

Housing allowances are on the rise with many more companies considering increases up to 20%. The adjustment trend started in 2013 and has continued. The average increases in housing allowances have hovered at 12% on average while rents have shown increases of about 30-60% in some areas of Dubai. There is a definite misalignment and it appears that the actual anticipated increase for 2015 will be about 5% this year.

The major reason salary hikes are expected to remain capped is directly linked the drastic drop in oil prices.  Other factors include weaker demands, as other oil-producing markets have increased production. However, the UAE has refused to cut production to maintain the market share.

Interestingly, facing higher cost of living, combined with less savings, cutbacks in spending are not an option in Abu Dhabi or Dubai. When surveyed, 4 out of 10 employees are planning to buy a new vehicle within the next 6 months and 3 out of 10 plan to invest in property.  Three out of 10 also plan to buy a computer or laptop.

When surveyed about job satisfaction, 75% of employees are satisfied with their current job. Impressively, 26% are “extremely satisfied” with their current job. Out of all nationalities, Emiratis were the happiest in their job situation. As companies based in the UAE continue to succeed and grow, salaries, benefits, career development, workload and working hour flexibility will need to continue to keep pace to meet employee needs to maintain these levels of satisfaction in a highly competitive market.


James Swallow is Commercial Director of UAE based PRO Partner Group. PRO Partner Group specialises in providing foreign investors with a seamless and financially efficient means to setting up a profitable corporate presence in the Abu Dhabi and Dubai. We can advise on the best way to set up your business to undertake the relevant activities and access the relevant sections of the market, UAE local market, Government, Onshore, Freezone and Internationally. Contact James direct on james@propartnergroup.com for further information.