UAE salaries to rise by 3% in 2022, study finds

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About 43 per cent of businesses in the UAE plan to increase salaries in 2022 by an average of 3 per cent as the job market and economy improve on the back of Expo 2020 Dubai and the government’s positive handling of the Covid-19 pandemic, according to a report by recruitment agency Cooper Fitch.

The Cooper Fitch UAE Salary Guide 2022, which polled more than 600 companies in the UAE, found that 35 per cent of businesses plan to increase salaries from zero per cent to 5 per cent, while 4 per cent of companies will offer employees a raise between 6 per cent to 9 per cent and 5 per cent will boost wages by 10 per cent or more.

“We predict that salaries in 2022 will increase by 3 per cent in the UAE,” said Trefor Murphy, founder and chief executive of Cooper Fitch.

“Many of the UAE’s traditionally strong sectors such as tourism, real estate and aviation were hit hard during the pandemic but have since started to see a positive recovery, with announcements of rehiring for both airlines and the hospitality sector.”

Since the Covid-19 pandemic began in March last year, the UAE has spent billions of dirhams in economic stimulus measures to support businesses.

Business activity in the UAE’s non-oil private sector improved to its strongest level in about two and a half years in November, on the back of increased economic activity from Expo 2020 Dubai, an improvement in tourism activity and increased spending amid the economic recovery.

The UAE’s IHS Markit purchasing managers’ index climbed to 55.9 in November, from 55.7 in October, the highest reading since June 2019. A reading above 50 indicates economic expansion while anything below points to a contraction.

About 37 per cent of organisations said they did not plan to make any changes to salaries next year while 19 per cent said they would decrease salaries in 2022 by up to 10 per cent, the Cooper Fitch research found.

Forty-one per cent of companies in the Emirates said they increased salaries in 2021. Businesses in the advisory, human resources, manufacturing, technology, strategy and public sectors said they raised salaries by up to 10 per cent, according to Cooper Fitch.

A report by Mercer last month found that employers in the UAE will go on a hiring spree in 2022 and raise salaries by an average 3.6 per cent as demand for jobs picks up amid the UAE’s post-coronavirus economic recovery.

About 74 per cent of businesses surveyed in the UAE said they plan to pay bonuses next year, with 46 per cent of those paying one to two months of gross salary and 21 per cent paying three to five months, said Cooper Fitch. Only 26 per cent of businesses said they were not going to pay bonuses next year.

“2022 looks to be a return to near full bonus pay out with exceptions for struggling organisations,” Mr Murphy said.

About 63 per cent of companies in the UAE said they paid out bonuses in 2021, a 19 per cent increase compared with last year, the report said.

About 59 per cent of organisations plan to increase their headcount by up to 10 per cent or more in 2022, whereas 23 per cent plan to reduce the number of employees, the research found.

Meanwhile, salaries in Saudi Arabia are expected to increase by 4 per cent next year, according to the Cooper Fitch survey, which polled more than 600 companies in the kingdom.

“We see the greatest demand for talent will be within major government restructuring projects, large-scale infrastructure projects, growth in talent needs for giga and mega development and tourism projects, and private sector growth,” Mr Murphy said.

“Coupled with the developing sectors such as entertainment, culture, heritage and destination, there will be a peak demand next year for talent.”

About 68 per cent of businesses in the kingdom plan to increase headcounts in 2022, with 30 per cent of those boosting employee numbers by 10 per cent or more, Cooper Fitch said. However, 19 per cent of companies said they plan to reduce their headcount in 2022.

Thirty-nine per cent of organisations in Saudi Arabia said they raised salaries in 2021 by up to 10 per cent or more. Those sectors included sales and marketing, legal, HR, strategy and technology, the Cooper Fitch report found.

While 20 per cent of companies said they would decrease salaries by up to 10 per cent in 2022, 38 per cent plan to make no changes.

Eight in 10 companies surveyed said they will pay out bonuses in 2022, with 30 per cent of those paying three to five months of gross salary and 49 per cent paying one to two months.

Only 14 per cent said they do not plan to pay bonuses next year, according to Cooper Fitch.

In comparison, 68 per cent of companies said they paid bonuses in 2021, a 4 per cent increase from 2020, the report said.