Feeling the pinch: UAE employees to get meager salary hike

Published April 8th, 2015 - 06:27 GMT

UAE employees can expect an average salary increase of 5 to 6 per cent this year, which is slightly lower than what they received in 2014, according to the latest research findings by two leading recruitment specialists.

Experts have lowered the forecast for wage adjustments in 2015 mainly due to the uncertainty about oil prices. However, more jobs are expected to be up for grabs this year, with headcounts seen to increase by at least 10 per cent and the gross domestic product (GDP) across the region forecast to continue its growth momentum in 2015.

According to the Morgan McKinley 2015 UAE Salary Guide, salary increases this year will be in line with inflation at around 5 to 6 per cent, while the overall number of new jobs will likely jump by 10 to 12 per cent.

The professional services recruiter said they had earlier forecast 2015 to be “bumper year” in terms of salary growth and job creation, but the decline in oil prices had prompted them to reassess and lower expectations.

“The major caveat is the fall in global oil prices to an eight-year low in 2014,” said Trefor Murphy, managing director at Morgan McKinley UAE.

“The current prognosis is that the fall in oil prices is likely to be short-lived. However, if the price should fall further, the economic outlook is likely to change significantly.”

In a separate study by Mercer, a human resource consulting firm which conducts quarterly surveys on salary increases, it was found that employers in the country are planning to grant a median salary increase of 5 per cent. About seven per cent of the companies said they don’t intend to change staff salaries this year.

A number of employees in the UAE will probably continue to feel the pinch on their wallets this year, considering that a 5 per cent salary increase won’t be enough to cover the increases in rent and other living essentials.

The situation is going to make it a bit challenging for employers to source new talent from within the UAE, as candidates based in the country will now be more extra careful about moving jobs. “Locally based candidates will tend to wait for an opportunity offering a major salary hike before moving jobs, and this is a factor depressing the talent supply,” McKinley said in a report.

The cost of renting apartments last year went up by around 15 to 20 per cent, while salaries, according to Mercer’s research data, increased by an average of 5 per cent.

“For many, the actual cost of living is outstripping salary increases with 2014 rents having soared to an annual rate of increase of 15 to 20 per cent,” said Murphy.

“Many employers, however, are holding firm on salaries and will import professionals from abroad.”

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