Think you are up for a salary hike this year? Businesses in the UAE reckon they need to, as counter to inflation costs and more. Image Credit: Shutterstock

Dubai: Businesses in the UAE could come up with a 4.4 per cent salary hike this year, a marginal hike on the 4.2 per cent gain employees got in 2022. This is according to a survey of nearly 500 businesses in the UAE by WTW, an advisory firm.

Organisations are raising their pay packets for three specific reasons: 80 per cent say they are concerned about inflation (and trying to match inflationary increases with salary hikes); 37 per cent said they are responding to a ‘challenging’ labour market; and 32 per cent said they want to improve the retention of existing staff.

In fact, four in ten employers said their pay budget is now higher than they thought it would be, according to the survey. 

“Employers are facing tough choices as they try to control costs during a challenging economic climate - but also struggle to keep their pay levels attractive,” said Laurent Leclere, Director of Reward Data Intelligence, WTW UAE. “The pressure of inflation and a competitive labour market are forcing many to increase their pay budgets so that they can both retain and attract the best staff.

“Those organizations that succeed will have a clear reward strategy and an understanding of what employees are looking for.”

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Slower hiring

Towards the end of last year, businesses in the UAE had slowed down on new hiring, with a possible exception being the recruitment of tech professionals across positions. According to recruitment sources, government, semi-government and banks were particularly busy in adding to their tech teams - if they hadn't already done so earlier in the year.

According to Leclere, the hiring is extending to other areas too. “There are signs of optimism around business sentiment and hiring plans, particularly for certain roles like sales and engineering," he said. "While pay is important, there are many other factors involved in workplace engagement and success, and employers need to deliver an attractive overall employee experience.”

Getting insights from UAE businesses
The Salary Budget Planning Report from WTW polled responses from 488 organizations in the UAE. The findings reflect those from other consultancies, where employers said they would consider hiking pay scales so so to match inflation increases. But much depends on the depth of a recession forecast for the global economy this year.