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UAE companies plan to increase their budgeted annual salaries by 5% in 2023, up from the 3-4% observed in recent years. This is in response to two-thirds of companies receiving requests from employees for higher pay to offset rising inflation.
Businesses are feeling the pressure to adjust pay packages, according to a new survey by global consultancy Mercer, whose latest field survey shows that 67% of businesses have received employee requests for compensation and allowances to offset the UAE’s rising unemployment rate. inflation.
Nearly 84% of businesses have yet to adjust employee compensation this year in response to higher-than-normal inflation, the survey found.
retain talent
Mercer’s 2022 UAE Inflation Spot Survey surveyed more than 200 global and local companies from various industries, and only 16% took some form of action, including one-off lump sum payments, off-cycle wage increases and housing Subsidies have increased as they look to retain talent, with an average pay rise of 4% in the annual pay cycle in early 2022.
However, most businesses in the UAE are resisting the demands of their employees. According to the latest data from the Central Bank of the UAE (CBUAE), even with inflation in the UAE expected to hit 5.6% in 2022 and Dubai being one of the most expensive cities to live and work for expats this year, according to Mercer’s Cost of Living Survey 2022,47 % of companies do not plan to take any action in 2022, while 37% are considering or planning some form of off-cycle adjustment to compensation in 2022.
Although inflation in the GCC’s second-largest economy remains relatively low compared to the rest of the world, business activity in the UAE has been on the rise in 2022, leading to a greater need for businesses to attract and retain talent to ensure business productivity. out to maintain stable tracking. Also, in a tight labor market, employees’ pay expectations are rising as they increasingly demand that companies take action to offset rising inflation.
Employers are cautious
“Employers are wary of raising wages immediately to combat inflation, and many are considering short-term actions with less permanent effects, such as lump sum payments or retention bonuses,” said Andrew El Zein, senior associate career advisor for the Middle East and North Africa region at Mercer. , or is improving the work experience for employees by offering better work-life balance, flexibility and training.
“Having said that, companies are budgeting for higher pay raises next year that will ultimately offset employee concerns about inflation and match rising pay expectations. This requires a structured approach where employee concerns are aligned with those of employees. Striking a balance between managing a challenging and unpredictable fiscal environment.”
Organizations participating in the survey included some of the UAE’s largest companies and international organizations. – arab trade news agency
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