A combination of high wages and a continuing influx of talent from other countries will result in either zero or low single-digit salary increases in the UAE in 2025, according to recruitment consultants.

There are more candidates available in the market than jobs, and that's certainly softening the market, says Trefor Murphy, founder and chief executive of recruitment firm Cooper Fitch.

“The second piece is if you look at what an accountant gets paid in Dubai versus London and New York, we're at the top end of that spectrum. Our salaries are already high and tax-free. The multinationals we work with would say that they pay people in the UAE and Saudi Arabia among the highest in their groups,” he says.

“So, the cost of doing business here has increased from a fixed salary point of view. Also, Dubai is certainly not a hardship post, living here has a serious upside to it, unlike London with an average 45 per cent tax rate, and New York.”

Employees in the UAE have been accustomed to receiving salary increases, living a tax-free lifestyle, and built that into their cost of living. But this “gravy train” can't last forever, Mr Murphy says.

Companies in the Emirates cannot keep paying above other countries or geographical areas and still remain competitive, he points out.

Consulting company Mercer, meanwhile, projects salaries in the UAE to increase by 4 per cent in 2025 based on a survey of more than 700 companies across a range of industries.

“However, the results indicate that the growing gap between reward packages for new hires versus existing employees is one of the top concerns with regards to competitive pay,” says Andrew El Zein, UAE career products leader at Mercer.

Hiring outlook

The UAE’s hiring outlook in 2025 is anticipated to remain stable, with no drastic changes expected, says Zahra Clark, head of the Middle East and North Africa region at Tiger Recruitment.

The region continues to attract a high volume of expatriates looking to relocate, which is affecting the talent market, she says.

Many candidates are willing to accept salaries lower than the market standard, creating a potential for wage dilution in certain roles. While demand for skilled professionals remains strong, especially in high-growth sectors, the influx of talent could lead to increased competition among jobseekers, Ms Clark adds.

According to Nicki Wilson, owner and managing director of Dubai-based consultancy Genie Recruitment, the UAE is a “hot” market at present. “Luckily, there are many growing businesses who are also setting up here. The UAE is a hub of activity, and a lot of people seek the lifestyle, safety and way of life here. This means that 2025 will be a flurry of activity.”

More than a quarter (28.2 per cent) of UAE organisations are planning to increase headcount next year, according to the results of Mercer’s Total Remuneration Survey.

The UAE’s job market is also shifting away from traditional relationship-based hiring (wasta) and is now leaning towards more skill-driven, future-focused selections, says Nevin Lewis, chief executive and principal consultant of Black and Grey HR. Candidates who continuously upskill and align themselves with evolving industry demands stand out.

Departments that are finding it hard to hire and retain talent – because of shortages – include sales and marketing, engineering, supply chain, drilling and exploration, and IT, according to Mr El Zein from Mercer.

Which industries will offer wage hikes?

Companies in the consumer goods sector are predicted to have the highest salary increases, with wages rising 4.5 per cent, Mercer data shows.

The life sciences and technology sectors are anticipating raises of 4.2 per cent and 4.1 per cent, respectively, while the energy and financial services sectors are likely to see 4 per cent increases.

“Roles in social media, digital marketing and people with skills in artificial intelligence and technology may be able to obtain a salary increase as the current market is looking out for these skills particularly,” according to Ms Wilson.

Roles in tech start-ups, digital, FinTech and maybe even sales may receive a salary increase.

“Sectors that won’t see an increase would be within retail as there have been so many redundancies across this sector as many shoppers go online. There is also such a high supply of junior talent, admin and general office support that this area will see a decrease in salaries,” she says.

Can employees expect a bonus?

Shiraz Sethi, regional head of employment at law company Dentons, says if companies have agreed to pay bonuses in contracts, then these payments must be upheld.

“Bonuses are not necessarily sector-based. This will depend on how well the company has done overall, how well the individual has performed and whether they have a guaranteed vs discretionary bonus arrangement within their contract of employment,” he says.

Ms Clark from Tiger Recruitment estimates that bonuses will range from 2 per cent to 6 per cent of annual salary in some industries, while others can offer bonuses as high as 30 per cent or more, reflecting strong performance and market demand.

Payments and sizes of bonuses largely depend on the market dynamics and profitability of each sector, with real estate, finance and high-growth industries typically being more generous in their bonus structures, she observes.

Mr El Zein from Mercer says sectors that are most likely to pay bonuses in 2025 are those that have traditionally included short-term incentives as part of their overall rewards package. Typically, the value of these incentives has remained stable at about 12 per cent of the overall pay mix.

Food and beverages is one sector where there has been a rise in annual bonuses, according to Ms Wilson. But across all industries, “there is no set bonus amount”, she says.

Employers may also focus on benefits such as housing allowances or flexible working conditions to retain talent as expenses rise.

What other benefits can employees expect?

The rising cost of living is possibly prompting some companies to review additional benefits for their current staff. This is more to ensure staff retention as the UAE is experiencing a steep rise in the cost of many major expendables such as rent, Ms Wilson explains.

“More businesses will be considering offering schooling to attract the best talent. There is also a rise in wellness-based benefits, perhaps duvet days, workshops or health-related benefits,” she says.

Ms Clark says some companies are introducing remote work options, allowing employees to work from anywhere for up to a month, while a few continue to provide annual flight allowances for expatriates, she says.

Flexible working hours are becoming more common, driven by government encouragement to improve work-life balance and ease traffic congestion in cities like Dubai, she adds.

Mr Sethi says non-financial benefits appear to be key, especially for the younger generation. Work-life balance and the ability to do remote work seem to be top priorities for employees.

Employees are also keen to benefit from an on-the-job learning culture, says Mercer’s Mr El Zein, adding that training and development in AI is likely to be a key area of focus.