Employees in the UAE can expect a double-digit salary increase in 2023 as the labour market is facing a shortage of suitable candidates.

As a result of a shortage of skilled workers in the market, HR and recruitment industry executives say that passive employees (who are already employed) were demanding almost double in late 2022 as compared to what they were demanding in early last year.

Raghib Salim, general manager, Nadia Global, said salary offers for new hires started rising from 20 per cent below the market to match the current market rate last year due to a shortage of jobseekers in the market.

“Passive candidates who at the start of 2022 had been looking for a 10-15 per cent salary hike when changing jobs gradually started demand 25-30 per cent while most employers considered 15-20 per cent a norm to attract working professionals,” said Salim.

Nadia Global projected a 10 per cent increase in salaries in 2023 as compared to five per cent last year.

“We now face a situation where the increasing number of vacancies and shortage of suitable candidates, coupled with the changes in employee expectations for walk-life balance and salary increases, may see us facing double-digit salary increases for the first time since 2008,” said Ian Giulianotti, executive director of Nadia Global.

A survey conducted by jobs portal Bayt and YouGov found that 53 per cent of workers in UAE expect to receive a salary raise in 2023.

Meanwhile, 57 per cent of UAE respondents claim that their current salary package consists of basic salary and benefits, 26 per cent claim that it consists of basic salary only. Around 30 per cent of employees said that their company pays for overtime.

Personal medical insurance, annual air ticket and gratuity are found to be the top benefits that are offered to employees in the UAE.

Is a double-digit salary increase here to stay?

“Employers need to treat compensation as an integral part of an employee’s reward and monitor major factors driving the salary expectations,” said Ola Haddad, director of human resources at Bayt.com.

Zafar Shah, research director at YouGov, said while financial rewards are key to attracting talent into organizations, non-financial rewards can be essential differentiators when it comes to retaining talent.

Ian Giulianotti of Nadia Global suggested that both employers and employees need to find a suitable medium where businesses achieve profitable growth and employees get a fair rate to avoid them seeking alternative jobs.

He alerted employers that if the double-digit pay rise era takes hold, then they would have to look at alternative methods to reward and recognise employees.

“Rent and petrol prices are becoming the primary drivers of inflation in the UAE. Employers will need to review housing and transport allowances regularly and reasonably,” he said.

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