About 49 per cent of companies in the UAE are budgeting for higher salaries during their annual pay reviews this year, as inflation increases the cost of living globally, according to a new report.
Sixty-eight per cent of organisations in the Emirates said they conduct a annual pay review, according to professional services company Aon, which surveyed 150 companies across all industries in the country in the first two weeks of June.
Companies that participated in the survey included the Prime Minister's Office, Majid Al Futtaim, Abu Dhabi Investment Authority, Abu Dhabi Global Market, DP World, Beeah Group, Mubadala, Mondelez, Microsoft and Airbus, among others.
The actual and budgeted amount for regular pay increases for a majority of companies in the UAE ranges from 2 per cent to 6 per cent, the survey revealed.
“Post-pandemic labour market pressures are placing significant strain on how organisations manage these turbulent times,” said Robert Richter, Middle East head of data business for human capital solutions at Aon.
“In order to best counteract the challenges that are faced in the current environment, there is an increased need to review employees’ salaries to ensure they can attract new talent and retain their current workforce.”
Inflation in the Emirates is relatively low, compared to other parts of the world. It was 3.3 per cent in the first quarter and is projected to average 2.7 per cent for 2022, according to the UAE banking regulator.
For 2022, inflation globally has been forecast at 5.7 per cent in advanced economies and 8.7 per cent in emerging market and developing economies, according to the International Monetary Fund.
Meanwhile, 43 per cent of businesses in the UAE plan to increase salaries in 2022 by an average of 3 per cent as the job market and economy improve on the back of Expo 2020 Dubai and the government’s positive handling of the Covid-19 pandemic, according to a December report by recruitment agency Cooper Fitch.
Fourteen per cent of UAE companies are planning an “exceptional mid-year pay review or increase”, the research showed.
Of these companies, 21 per cent are budgeting for a salary increase in the range of 5 per cent to 8 per cent, while 24 per cent are aiming for an increase greater than 9 per cent, according to Aon.
Seventy-four per cent of companies have felt increasing pressure to attract and maintain talent in the current job market, the survey found.
“The two key reasons for companies conducting salary reviews are to maintain the competitive landscape and employee retention,” Aon said.
Apart from increasing salaries, companies are also offering special allowances on an ad-hoc basis, extending one-time supplementary payments, changing their reward structure and amending benefits and allowances to help employees cope with increasing inflation, it added.
Companies plan to adjust employees’ housing and transport allowances the most during the pay review, followed closely by education allowances, according to the report.
Sixty-six per cent of UAE employers said an increase in housing allowance would apply to all employees.
UAE salary guide 2022 — in pictures
Salary increases would differ across job roles in the organisation, 78 per cent of employers surveyed said. Junior and middle management, on average, have higher salary increase budgets allocated compared with top leadership, the research showed.
