UAE employees can expect 4% salary increase in 2022

04 January 2022 3 min. read

Employees in the UAE will on average enjoy a 4% increase in their salary this year, according to the latest estimate by HR consultancy Mercer.

Every year, the global human resources consulting firm canvasses HR leaders across the United Arab Emirates for their views of the labour market, among others looking into compensation & benefits.

Asked about the salary rise forecasted for 2022, leaders said the annual increase will amount to an average of 4%, above the 3.6% and 3.8% salary increases handed out in 2021 and 2020 respectively, but still below the pre-pandemic level (4.5% in 2019).

UAE employees can expect 4% salary increase in 2022

“This year’s study shows positive sentiment toward salary increases although not quite at pre-pandemic levels,” said Ted Raffoul, Career Products Leader at Mercer.

Meanwhile, across the board, a large share of employees will fare better in 2022 than in previous years. In 2020, 14% of companies froze the salaries of their employees, a number which dropped to 10% in 2021. “This year we expect only 5% of companies to freeze salaries,” said Raffoul.

From a sector perspective, companies in the life sciences, food & beverage manufacturing and consumer goods are set to leverage their robust performance during the pandemic to outpace salary growth, while the technology and energy industries will according to Mercer’s findings lag slightly at 3.5% and 3.4% respectively.

A much-needed hike?

The higher salary rises are to an extent in part needed to counter growing competition for talent. A McKinsey & Company research from late last year warned for the looming ‘Great Retention’ crisis, with many professionals that had stayed put for an extended period now keen on moving on, while many others are eyeing to capitalise on favourable employee market conditions.

“Our survey shows that hiring is rising due to the promising economic recovery experienced in the UAE with companies reporting an intention to hire for more new roles than in 2020. This rebound is shifting the talent landscape with employees having more options,” explained Raffoul.

Andrew El Zein, an Associate at Mercer added: “Signs of growth are evident in the increased hiring activity that we have seen in 2021 and the positive forecast for 2022. Employers are priortising hires for in demand skillsets that will support future business growth, however the talent pool is still developing, causing somewhat of a talent war.”

As a result, “employers are swiftly re-addressing their compensation and benefits strategies in order to attract and retain top talents,” said El Zein, with salary a major part of this equation.

Other elements which are receiving more focus include flexible working models, long term incentives plans (particularly for executives and talent with experience in specialised fields), and pay programs that more closely align to skills (known as pay-for-skills, which introduces a clearer link between pay advancement and skills progression).

HR leaders of close to 600 organisations in the UAE participated in Mercer’s survey.