UAE businesses to increase hiring and salaries amid promising economic growth

• Attracting and retaining talent requires an increased focus on flexible working policies such as hybrid or remote working

Dubai, United Arab Emirates – Mercer’s 2021 Total Remuneration Survey (TRS) demonstrates the need for companies to readress their compensation and benefits strategies to attract and retain talent amid an increasingly competitive talent landscape, spurred by a post-COVID-19 pandemic economic rebound. 

The 2021 survey shows that hiring is rising due to the promising economic recovery experienced in the UAE with companies reporting an intention to hire for more new roles than in 2020. This rebound is shifting the talent landscape with employees having more options resulting in employers rethinking their talent, compensation and retention strategies to mitigate the risk of a talent war, particularly in high-demand skill-sets following the augmented post-COVID-19 pandemic landscape. The rise in both GDP and inflation in the UAE demonstrates positive market sentiment, spurred by the UAE’s swift deployment of its COVID-19 vaccination programme and the increased tourism brought about by EXPO 2020.

With increased competition employers are swiftly re-addressing their compensation and benefits strategies in order to attract and retain top talents. Mercer’s TRS shows that companies are increasing their focus on long term incentives plans, particularly for executives and those with experience in specialised fields. A key benefit that employees are seeking is that of flexible working, which has been in demand globally.

Commenting on the findings of the survey, Andrew El Zein, Associate, Career, MENA at Mercer said: “Signs of growth abound and are evident in the increased hiring activity that we have seen in 2021 and the positive forecast for 2022. Employers are priortising hires for in demand skillsets that will support future business growth, however the talent pool is still developing, causing somewhat of a talent war. To attract and retain top talent employers must look to maintain pace with market-wide salary growth and benefits. Optimism is strong when looking at 2022 with many UAE companies forecasting a higher wage increase in order to attract and retain top talent, particularly in competitive fields.”

For 2021, Mercer’s TRS research of 599 companies in the UAE Mercer’s TRS findings suggest an overall salary increase of 3.6%, which is slightly below 2019 and 2020 figures of 4.5% and 3.8% respectively. However, 14% of companies froze salaries in 2020, while in 2021 it went down to 10%. For 2022 we expect only 5% of companies to freeze salaries.

The study also shows that technology and energy industries are lagging slightly at 3.5% and 3.4% respectively. The industries predicted to outpace growth are life sciences and consumer goods at 4% as a result of the robust performance of the sectors during the pandemic.

When looking to 2022, there are clear signs of economic optimism with TRS respondents suggesting that we see an annual increase aligned to pre-pandemic levels with all industries expected to average a 4% increase. For 2022, industries that will be aligned to the 4% increase include high-tech, life science, and consumer goods. Conversely, energy salary increases are expected to be slightly lower at 3.8%.

TED Raffoul, Career Products Leader, MENA, said: “This year’s Total Remuneration Survey shows positive sentiment toward hiring trends and salary increases although not quite at pre-pandemic levels. Companies must focus on continuing to provide flexible working models to employees in order maintain a strong proposition as an employer.”

Executive Compensation Trends in GCC 

Within the region, we are seeing increasing interest in developing attractive long-term incentive (LTI) plans to attract and retain top executives. A key driver in growth of LTI plans is the rise of successful start-up ecosystems in the Middle East that require world-class talent. Mercer’s TRS shows that 28% of companies in UAE have an LTI plan, which are increasingly important to attract senior talent. 

Pay for Skills Practices 

Only two in five HR professionals know the skills needs of their organisation and only 9% of companies formally monitor the market demand and availability of skills. Amid a rapidly changing market brought about by increased digitalisation, employers must reskill employees and focus on compensation that is focused on pay-for-skills, which ties the career and pay advancement of employees to their skills progression.

Ted Raffoul said: “Companies are scrambling to find ways to pay for the skills sets they need to support their accelerated digital transformation agenda. However a few companies have developed interesting systems to link pay to the attainment of skills required by the business, and we expect many more to adopt similar practices soon.”

Mercer’s annual salary surveys are conducted regionally in over 15 countries across the Middle East and North Africa. In the UAE specifically, 599 organisations were surveyed across all industries, including manufacturing, retail and wholesale, high tech, chemicals, consumer goods, life sciences and energy.

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About Mercer  

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 78,000 colleagues and annual revenue of over $18 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on LinkedIn and Twitter. 

Contact:
Ana Baptista 
ana.baptista@mercer.com 

© Press Release 2021