Will UAE salaries rise in 2026? New report reveals sectors offering pay hikes

Dubai: Employees in the UAE can expect their salaries to increase by around 4.1 per cent in 2026, according to a new forecast from the global consulting firm Korn Ferry.

This is a slight drop from the 4.2 per cent raise given in 2025 but still shows that companies are competing to offer better pay amid economic growth and rising living costs, according to its UAE salary forecast 2026.

Still, this is slightly lower than the 4.2 per cent increase seen in 2025, but it reflects a “competitive market amid economic growth and inflation pressures”.

Employers across sectors are now reshaping their compensation strategies to attract and retain talent in a tightening labour market, which is the need of the hour given the rapid influx of people moving to the UAE.

Dubai’s population recently hit a whopping four million — the highest ever, while the UAE’s population hit 11.44 million this year, according to Worldometer.

While Dubai is fast becoming a mega hub for millionaires worldwide, a big portion of the newcomers are expected to be jobseekers than entrepreneurs.

However, the UAE is attracting a lot of foreign investment and local businesses are expanding their portfolio to take advantage of the fast-growing economy, hence creating a lot of job opportunities for professionals looking for greener pastures.

Specialist roles in engineering, technology, logistics, finance, and accounting remain in high demand, driven by accelerated digital transformation and sector diversification.

"The UAE has reached market maturity where compensation planning is no longer reactive," said Vijay Gandhi, Korn Ferry’s Regional Director. "Organisations now focus on building the right capabilities for the next five years, requiring sophisticated reward and development strategies."

Banking, real estate, oil and gas, industrial, and retail sectors are forecasted to offer the most substantial salary hikes in 2026, supported by ongoing investment pipelines and new operating models.

The heightened competition within the GCC, especially from Saudi Arabia’s national transformation programmes, is putting pressure on UAE firms to offer compelling career opportunities to retain crucial talent, according to the report.

Rising living costs, particularly in housing and education, have made salary increases vital for employee retention.

Korn Ferry research shows that 80 per cent of employees in the UAE and Saudi Arabia are willing to switch jobs for better pay—a dramatic 25 per cent rise from the previous year. This trend signals a critical need for employers to rethink compensation structures carefully.

Employers must not only match salary expectations but also focus on building long-term value through career development and workforce design, as HR leaders realise the stakes in this fiercely competitive year ahead.

Anis Abdeljawad of Korn Ferry said that young professionals face a slow-moving reset in their careers due to longer hiring cycles and smaller raises.

Additionally, 43 per cent of companies plan to replace roles with AI, mainly targeting operations and back-office positions, potentially reshaping future leadership pipelines.

Among GCC countries, Saudi Arabia will lead average salary increases at 4.6 per cent, followed by Qatar and Oman at 4.3 per cent, with the UAE close behind at 4.1 per cent. This regional competitiveness and talent mobility add complexity to salary planning in the Emirates.