Fewer workers in the UAE will get a salary rise in 2021, new survey finds

High level of uncertainty caused by Covid-19 will impact decisions on pay increases and bonuses, according to Cooper Fitch’s UAE Salary Guide

Fewer firms than expected said they made redundancies in 2020. According to Cooper Fitch’s UAE Salary Guide for 2021, 67 per cent of companies said they had made no redundancies in 2020, while 30 per cent said they had let staff go. Getty ImagesShow less

A majority of companies in the UAE are unlikely to give their employees a pay rise in 2021 as the market recovers from the effects of the Covid-19 pandemic, according to a new report by recruitment agency Cooper Fitch.

The Cooper Fitch UAE Salary Guide 2021, which polled 200 firms in the UAE, revealed that 45 per cent of companies have not yet decided whether to implement pay rises for staff next year, while 68 per cent did not know if they would pay this year’s bonuses. A third of companies surveyed said there would be no change to existing salaries in 2021.

“The key finding from our salary guide is the continued high level of uncertainty among businesses," Trefor Murphy, chief executive and founder of Cooper Fitch, said.

"We believe this trend will prevail until the factors that are negatively impacting the market – lower oil prices, the after-effects of the pandemic and so on – gradually improve throughout 2021," he added.

“Many of the companies we surveyed have some big decisions to make at the start of 2021, as a significant proportion had yet to decide if they would implement a merit salary increase for staff next year or pay out agreed bonuses for 2020.”

However, as business activity continues to improve, firms could step up recruitment, the study found.

Sixty-two per cent of companies in the UAE said business activity was either busy or had started to pick up by the fourth quarter of 2020, according to the survey.

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Despite high levels of Covid-19-induced market uncertainty, fewer firms than expected said they made staff redundant in 2020, 67 per cent said they had made no redundancies at all this year and 30 per cent said they had let go of employees.

The study found that 34 per cent of companies implemented a hiring freeze in 2020, while 28 per cent are recruiting for replacement positions only.

Technology, advisory and financial services firms performed the strongest in the UAE this year, while real estate and the public sector struggled the most, the survey said.

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In November, a study by global recruitment consultancy Robert Half found that salaries in the UAE will remain stable in 2021 and are expected to withstand the economic challenges caused by the Covid-19 pandemic.

Sectors such as technology, pharmaceuticals, finance, government and human resources will offer the biggest wage increases, bonuses and benefits to employees in an effort to retain top talent, according to Robert Half's 2021 Salary Guide.

“We have the prospect of an approved Covid-19 vaccine on the horizon, which should further invigorate business and consumer sentiment and positively impact the recruitment market in 2021,” Cooper Fitch's Mr Murphy added.

We have the prospect of an approved Covid-19 vaccine on the horizon, which should further invigorate business and consumer sentiment and positively impact the recruitment market in 2021

Meanwhile, 37 per cent of companies in Saudi Arabia said they would implement a merit salary increase for staff in 2021, the Cooper Fitch survey, which surveyed 200 firms in the kingdom, found. More than half of all firms surveyed said business was either busy or had started to pick up by the fourth quarter of 2020, it added.

While 41 per cent of companies said they would pay bonuses for 2020, 24 per cent were undecided and 34 per cent said they would only partially pay it or not pay at all.

A majority of respondents said their priorities for next year were to finalise 2021 budgets and make bonus decisions, followed by contingency and manpower planning, the survey found.