UAE salaries to increase by 4.5% in 2020, new survey finds

Close to half of employers are planning to increase headcount next year in a positive sign for the jobs market, says Mercer

The highest increase in salaries of 4.6 per cent is expected in the life sciences sector, while the lowest increase of 3.7 per cent is projected in the energy industry. Getty Images

Employees in the UAE can expect an overall base salary increase of 4.5 per cent in 2020 across all industries after enjoying the same pickup in income this year, a new survey from global human resources consulting company Mercer found.

"It is very encouraging to see that a large segment of UAE employers are looking to increase salaries in 2020," Ted Raffoul, career products leader for the Middle East and North Africa at Mercer, told The National. "This is a reflection of a resilient and optimistic economy."

Nearly half (45 per cent) of respondents plan to increase their headcount in 2020, while 52 per cent expect to maintain their staffing levels and only 3 per cent are considering a decrease, according to Mercer's fourth annual Total Remuneration Study, which surveyed more than 500 UAE companies. The percentage of employers planning to increase hiring is at its highest, compared to 40 per cent this year, 39 per cent in 2018 and 42 per cent in 2017.

Although the International Monetary Fund revised its UAE 2019 economic growth outlook earlier this week from 2.8 per cent to 1.6 per cent, it projected a 2.5 per cent growth rate over the next five years until 2024. Inflation, which stands at around 2.1 per cent, according to IMF figures, has declined.

“Inflation is lower than salary increases. When you have that situation, that’s a positive, because it means that purchasing power is increasing,” Mr Raffoul said. “Gross domestic product is also growing and projected to keep growing over the next couple of years, so that’s a positive sign as well.”

The projected 4.5 per cent increase in salaries is comparable to other GCC countries. For example, salaries in Saudi Arabia are expected to increase by 4.8 per cent, Kuwait by 4.5 per cent and Bahrain by 4 per cent, according to Mercer’s study in those countries.

In the UAE, the highest increase in salaries of 4.6 per cent is expected in the life sciences (pharmaceuticals and health care), while the lowest increase of 3.7 per cent is projected in the energy industry. Salary increases for people employed in high-tech jobs are forecast at 4.5 per cent and for those in consumer goods at 4 per cent.

The survey also measured the involuntary and voluntary turnover rates for the year. Involuntary turnover, where employees are fired or made redundant, was about 4.5 per cent, in comparison to 8 per cent in 2016. The voluntary turnover rate, where individuals choose to leave an organisation, increased to more than 7 per cent this year after remaining stagnant in 2017 and 2018 at around 5 per cent.

“That indicates a positive job market. It means there are more opportunities for employees to actually find work,” Mr Raffoul said. “Back in 2016, due to the price of oil dropping significantly, that caused a lot of issues in the market and a lot of companies had to downsize, but now the involuntary turnover is much lower.”

David Mackenzie, managing director of GCC recruitment consultancy Mackenzie Jones, agreed with that assessment. “We are expecting an increase in headcount, as over the last three years companies have made deep cuts and are now operating, often at base level,” he said. “They are now looking to upskill their talent for 2020.”

In addition to overall salary and hiring trends, the Mercer report examined pay parity and career roles between men and women across different industries. While it found little or no gender pay gap, it reported a lack of women in senior management positions and Stem (science, technology, engineering and maths) roles.

“Less than 10 per cent of those Stem jobs are held by women,” Mr Raffoul said. “These are the jobs growing at the fastest rate, and there are no women there. And the jobs that are diminishing at the fastest rate tend to have a lot of women.”

The UAE government has been taking measures to increase women participation in the workforce and gender equality in line with its Vision 2021, including establishing the Gender Balance Council.

“We’re definitely seeing some changes coming in from the government, but we definitely need to keep the foot on the pedal to make sure we stay ahead of this,” Mr Raffoul said.