UAE salaries increase by 3.8% in 2020 despite Covid-19

Direct impact of the coronavirus on pay and benefits is less drastic than initially feared, Mercer survey finds

Salaries in the UAE rose by 3.8 per cent despite Covid-19, a new study by Mercer has found. Getty Images

Salaries in the UAE increased by an average of 3.8 per cent despite the economic challenges caused by Covid-19, according to a new study by global human resources consulting company Mercer that was released on Monday.

While 10 per cent of UAE companies reduced salaries temporarily this year due to the pandemic, the overall market still experienced positive salary inflation, according to Mercer’s Total Remuneration Survey, which polled more than 500 companies.

“It is very encouraging to see that despite the economic challenges, a significant number of UAE employers have increased salaries in 2020,” Ted Raffoul, Mercer’s career products leader for Mena, said.

Salaries for workers in the UAE’s life sciences sector (pharmaceuticals and health care) registered the highest increase, rising 4.5 per cent. This was followed by a 3.5 per cent increase for workers in consumer goods, 3 per cent for high-tech employees and 2.6 per cent in the energy industry.

“Notably, most 2020 budget and salary decisions had taken place early in the year ... [and] 17 per cent of companies delayed their 2020 increases due to the Covid-19 pandemic, typically for 6 months,” the study added.

The UAE’s 3.8 per cent increase in general market salaries is comparable to other GCC countries. In Bahrain, salaries increased 3.8 per cent this year, Saudi Arabia rose 3.7 per cent, and Kuwait and Oman 3 per cent, the study said.

Salaries in the UAE are expected to edge up again in 2021, with the Mercer study forecasting an average 4 per cent increase for UAE workers across the general market.

However, it said industry figures vary significantly for 2021 salary forecasts. The sharpest projected rise is again expected in the life sciences (4.5 per cent) and consumer goods (3.8 per cent) industries, while the energy industry would continue to see the lowest increase with 1.9 per cent.

“Although uncertainty continues into 2021, UAE companies are making progress towards enhanced business strategies, with a majority of them expecting new working arrangements to continue to evolve towards permanent policies,” Mr Raffoul said.

The study also found that 25 per cent of companies reported an increase in productivity as a result of employees working from home.

Earlier this year, the pandemic forced companies to deploy remote and flexible working measures when movement restrictions were introduced in March. About 66 per cent of companies in the UAE devised new remote working policies while 25 per cent already had one in place, the study said.

As a result of this, a “quarter of employers reported increased productivity and expect flexible working arrangements to continue to remain in place in a post-Covid-19 landscape”, it added.

The survey also indicated that hiring is picking up in certain sectors. Companies in the logistics sector said they increased headcounts, particularly for express and last-mile delivery jobs to meet strong demand from the e-commerce boom, caused by the UAE’s stay-at-home restrictions.

“Even though we expect uncertainty to span into 2021, the Total Remuneration Survey results promise a more optimistic new year as companies are increasingly reporting positive hiring sentiments compared to those indicated at the onset of the Covid-19 pandemic,” Carolina Vorster, Mercer’s workforce products leader for the Mena region, said.