UAE salaries have increased at a rate slightly above inflation, despite volatility of oil prices and global markets, a new survey by Hay Group has found.
Salaries across the UAE have increased by an average of 4% in 2015 compared to the forecast of 5%.
However, with inflation rising to 3%, recent rent hikes and deregulation of fuel prices, the overall cost of living has been significantly affected, meaning real growth in employees’ spending power is a negligible 1%.
Senior executive pay increases range between 3% and 8%. Indicative of the intensity of competition for talent at the most senior levels and the influence that these individuals have on business performance, this also shows the variance in business performance and strategic projections amongst different companies.
The impact of volatile global markets and oil prices is yet to be seen across the general UAE economy, according to the survey.
“Companies are treading with caution and we predict a more conservative approach to both general spending and future investment plans in both private and public sector organisations in the coming year. However we are yet to see any significant impact on typical indicators such as recruitment and compensation review plans,” explained Mr Bhatia.
“Approximately 90% of companies paid on or above target bonuses this year which is relatively high by global standards and could be interpreted as a positive sign for the UAE economy. However, we would expect to see a decrease in the levels of variable pay in 2016 if business performance does slow down,” said Mr Bhatia.
The data shows that over 25% of the workforce has been in their current position less than two years. This is indicative of the large volume of recent hires and points to economic growth and buoyant employment opportunities in the market, but also of high attrition rates as new hires join to replace former employees, Hay Group said in a recent release.
The gap between salaries in Abu Dhabi compared to those in Dubai stands at 9%. However, it has been steadily decreasing since 2010 when it was 22%, in part due to the old gap in rental rates.
Commenting on the data Mr Bhatia said, “One of the biggest differences between now and 2009 is that in the past, organisations would cut their training and development investment as one of their first profitability measures.
“This has changed. The cost of high turnover in the UAE is being felt in the boardroom, particularly with regard to senior and executive roles. Employers are looking for alternative ways to train, develop and engage their staff.”
Mr Bhatia concluded: “To make low salary rises stretch further in a time of economic uncertainty, workers who are performing well may receive higher than average pay increases, while it’s likely that poor and average performing workers will receive little if no increase.
“However, a business is nothing without its people and, during periods of low growth, organisations must think creatively about how they motivate and reward their best employees.”
