James Swallow

Is UAE Celebrating End of Pay Freezes too Early?

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Surveys suggest that UAE wages will increase 6% in the next year, but is the UAE celebrating too early?

Who’ll benefit?

Polls suggest that UAE wages will rise 6%, on average, over the next 12 months. Yet Robert Half UAE, a leading Emirati recruiter, has validated this information conservatively. The people most likely to secure pay rises are those who have demonstrated technical competency and measureable output on a consistent basis. Outlying factors such as tenure, longevity, professional conduct, previous pay raises and willingness to develop new skills will also most likely be entered the equation by UAE employers.

Therefore, you must outperform your colleagues to secure a pay rise – a reality which is currently working to the advantage of new recruits at firms throughout the UAE. Once more HR directors are now willing to discuss and negotiate compensation in interviews. In the current climate, a UAE firm is less likely to object – and they often now see it as acceptable – when a new recruit broaches the subject of compensation when applying for a position, or during the first stage interview.

Coping with living costs

Compensation is important because salaries aren’t increasing at the same rate as living costs. Average UAE wage rise pre-2008 was around 12%-13%, yet it slid to roughly 10% by 2010. With this reality, employees are being forced to secure more advantageous wages by moving from company to company. Firms that are more aggressive, more successful, can use offers of better compensation to secure the best talent, and competition for that talent is very much on the rise.

Many UAE firms are currently considering increasing housing allowances, which are already rising, by as much as 20% to compete with other companies. This adjustment trend, which started in 2013, has produced average housing allowance increases of 12%, yet in some areas of Dubai, average rents have risen around 30%-60%. Housing allowance increases aren’t aligning with rising rents; this trend looks set to continue in 2015, when the actual expected increase should be roughly 5%.

Many expect that salary increases will continue to be capped, largely because of the drastic drop in oil values which has recently been spurred by the global oil price crisis. A weaker demand for UAE oil, considering the fact that other oil-producing nations have upped production, has also contributed to the situation,  but the Emirates has resisted slashing production to preserve it’s market share.

Public opinion

In spite of higher living costs and declining savings, many people in both Dubai and Abu Dhabi refuse to slash spending. Four in ten employees polled admitted that they want to purchase a new vehicle in the next six months. Meanwhile three in ten plan to buy a laptop or computer, and the same number admitted that they plan to invest in property.

When asked about job satisfaction, three quarter of UAE workers said that they’re satisfied, and 26% said that they were extremely satisfied. Out of all the nationalities polled, Emiratis were the happiest in their current position. AS UAE-based firms continue to succeed – and expand – they’ll need to ensure that salaries, benefits, workload and working hour flexibility career development keep up with employee needs. Only then will they maintain current levels of job satisfaction in the UAE’s fiercely competitive jobs market.

James Swallow

James Swallow is Commercial Director of Middle East based PRO Partner Group. Pro Partner Group specialises in providing foreign investors with a seamless and financially efficient means to setting up a profitable corporate presence in the UAE, Qatar and Oman.

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