UAE businesses to increase hiring and salaries amid promising economic growth. Image Credit: Ahmed Ramzan/Gulf News Archives

Dubai: Hiring is rising in UAE rising due to “promising” economic recovery, with companies reporting an intention to hire for more new roles than they did last, according to the consultancy Mercer. The study also demonstrated the need for companies to readdress their compensation and benefits strategies to attract and retain talent amid an increasingly competitive talent landscape, spurred by a post-pandemic economic rebound.

Companies are increasing their focus on long-term incentives plans, particularly for those with experience in specialised fields. A key benefit that employees are seeking is that of flexible working, which has been in demand globally.

“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,” said Andrew El Zein, Associate - Career at Mercer. “To attract and retain top talent employers must look to maintain pace with market-wide salary growth and benefits. Optimism is strong when looking at 2022 with many UAE companies forecasting a higher wage increase in order to attract and retain top talent, particularly in competitive fields.”

A new talent mix

This rebound is shifting the talent landscape with employees having more options resulting in employers rethinking their talent, compensation and retention strategies to mitigate the risk of a talent war, particularly in high-demand skills. “The rise in both GDP and inflation in the UAE demonstrates positive market sentiment, spurred by the UAE’s swift deployment of its COVID-19 vaccination programme and the increased tourism brought about by EXPO 2020,” said the report.

Mercer’s findings suggest an overall salary increase of 3.6 per cent, which is slightly below 2019 and 2020 figures of 4.5 per cent and 3.8 per cent, respectively. However, 14 per cent of companies froze salaries in 2020, while in 2021 it went down to 10 per cent. For 2022, only 5 per cent of the companies are expected to freeze salaries.

The study shows that technology and energy industries are lagging slightly at 3.5 per cent and 3.4 per cent respectively. The industries predicted to outpace growth are life sciences and consumer goods at 4 per cent as a result of the robust performance of the sectors during the pandemic.

When looking to 2022, there are clear signs of economic optimism with respondents suggesting an annual increase aligned to pre-pandemic levels with all industries expected to average a 4 per cent increase. For 2022, industries that will be aligned to the 4 per cent increase include high-tech, life science, and consumer goods. Conversely, energy salary increases are expected to be slightly lower at 3.8 per cent.

“This year’s total remuneration survey shows positive sentiment toward hiring and salary increases although not quite at pre-pandemic levels,” said Ted Raffoul, Career Products Leader, MENA. “Companies must focus on continuing to provide flexible working models to employees in order maintain a strong proposition as an employer.”

Same sort of focus

Mercer said that within the Gulf, there was an increasing interest in developing attractive long-term incentive (LTI) plans to attract and retain top executives. A key driver in growth of LTI plans is the rise of successful start-up ecosystems that require world-class talent. Mercer’s TRS shows that 28 per cent of companies in the UAE have an LTI plan, also important to attract senior talent.

Pay for skills

Only two in five HR professionals know the skills needs of their organisation and only 9 per cent of companies formally monitor the market demand and availability of skills. Amid a rapidly changing market brought about by increased digitalisation, employers must reskill employees and focus on compensation that is focused on pay-for-skills, which ties the career and pay advancement of employees to their skills progression.

“Companies are scrambling to find ways to pay for the skills sets they need to support their accelerated digital transformation agenda,” said Raffoul. “However, a few companies have developed interesting systems to link pay to the attainment of skills required by the business, and we expect many more to adopt similar practices soon.”