Dubai: Private sector companies in the UAE are expected to increase employees’ salaries above the inflation level next year, although the negative impact of low oil revenues is being felt across the region.
Pay adjustments in the UAE are predicted to reach 5 per cent in 2016, much higher than the forecast 2.7 per cent inflation rate, giving employees “real increases” in their incomes, according to the Towers Watson’s latest salary budget planning study.
Those working in the financial and professional services, as well as in energy and natural resources industries, have more reasons to be upbeat , with their salary adjustments forecast to be higher than what they got this year.
Across-the-board salary adjustments, however, are less likely to happen, because most companies intend to allocate the chunk of their salary increase budget to high performers, and only a few have plans to grant a uniform pay rise.
Towers Watson’s findings are in line with other recruitment specialists forecasts. Earlier in September, AON Hewitt announced that salary adjustments in the UAE will average 5 per cent in 2016. The figure is higher than the 4.8 per cent forecast and actual increase implemented in 2015.
Despite volatility of oil prices and economic uncertainty, companies in the UAE distributed pay rises averaging 4 per cent this year, according to another recruitment specialist, Hay Group.
“Over 92 per cent of companies have made increases this year. We haven’t witnessed any specific industry or sector freezing promotions or pay increases. Focus is [on managing costs and that] the larger increases are given to high potentials and performers. This is a good policy and ensure retention of valuable talent,” Bhatia told Gulf News earlier.
Towers Watson also said that salaries in Kuwait, Oman and Qatar are expected to rise by 5 per cent, while Jordan and Lebanon employees can expect wage increases of 6 per cent and 5.8 per cent, respectively. Saudi Arabia employees are likely to get 5.5 per cent increase, while those in Bahrain will have the lowest adjustment of 4.6 per cent.
“Middle East employees can expect a steady rise in their incomes, with most countries in the region expected to have similar pay rises next year as in 2015,” said Laurent Leclère, senior consultant and data services lead for the Middle East at Towers Watson.
Leclère said companies are not ruling out salary increases because the economy is not going through a recession. "Unless a country is in recession and the future looks really uncertain, companies would typically continue to provide an increase to compensate inflation which remains in the region. On top of that, companies would also typically add up a couple of percentages for merit for good performers," he told Gulf News.
Towers Watson’s survey was conducted in July 2015 and gathered about 8,000 sets of responses from companies across 110 countries worldwide.