Inflation rates in the UAE are projected to reach 5.6 percent in 2022, according to the latest data from the Central Bank of the UAE (CBUAE). While this projection is on the lower end of the spectrum globally, businesses in the UAE are facing the pressure to pay more or pay allowances if they need to hire or retain talent.
In a survey by global consulting firm Mercer, companies said they are planning to grant salary adjustments of 5 percent in 2023, which is higher than the 3 to 4 percent salary hikes rolled out in recent years.
So far, most businesses have been hesitant to heed calls for higher salaries this year, with almost 84 percent of those polled by Mercer acknowledging that they have yet to adjust workers’ pay despite soaring living costs.
The survey showed that 67 percent of companies in the country have already received requests from staff regarding compensation and allowance adjustments.
Among those polled, nearly half said they don’t have plans to make adjustments, while 37 percent are either considering or planning some form of off-cycle adjustment to workers’ earnings in 2022.
These findings are in line with what was projected. 73 percent of companies surveyed for Hays Salary Guide 2022 said they would increase salaries this year. Out of these, 30 percent of employers expected to increase salaries from six to 20 percent, while the rest capped their salary hikes to 5 percent.
Similarly, a recent report by the global advisory firm WTW highlighted that employers in the UAE plan to increase salaries by an average of 4.4 percent in 2023 and are considering benefits such as retention bonuses in an effort to retain employees and attract talent amid a tight labor market.
