Dubai: With inflation soaring globally and a further increase on the cards before it peaks, companies, just like central banks, are pressed to take urgent steps to mitigate the impact.
According to a survey, 74 per cent companies in UAE are feeling the pressures of a post-pandemic labour market, where earlier salary packages are proving unattractive for the talent pool.
“In order to best counteract the challenges that are faced in the current environment, there is an increased need to review employees’ salaries to ensure they can attract new talent and retain their current workforce,” said Robert Richter, Middle East head of the data business for Human Capital Solutions at Aon.
Nearly half (49 per cent) of the companies that conduced an annual pay review are budgeting for higher salaries, the survey said.
Fourteen per cent of the companies are also planning mid-year pay reviews, the survey added. Of these, 21 per cent are looking at a 5-8 per cent increase, while 24 per cent are budgeting a hike greater than 9 per cent. A majority (42 per cent) of companies are looking at a 5-6 per cent hike in 2022. For 2023, 35 per cent firms are looking at a 2-4 per cent increase in pay.
On average, junior and middle management have higher salary increase budgets allocated as compared to top leadership, the report showed.
Companies say the two key reasons for conducting a salary review are maintaining the competitive landscape (35 per cent) and employee retention (27 per cent). Fifteen per cent companies said a pay hike would be necessary since salaries were below market rates, while 23 per cent said a hike was important to keep pace with rising inflation.
“We use these data insights to provide advice and solutions that give employers from an array of industries the clarity and confidence needed to make better decisions to protect and grow their business,” Richter said. “This report provides employers with latest facts and figures for the upcoming salary negotiations.”