Salary increase expectations for 2012 have risen in all Gulf countries over the past six months, according to data published by Aon Hewitt.
And less than 10 percent of the region's major employers are now implementing a pay freeze as they continue to rebound from the impact of the global economic slowdown, the HR giant said.
Data from its latest salary increase survey showed that the largest growth in expected wage rises were in Bahrain and Oman.
In Bahrain, salary rise expectations rose to 7.2 percent in the first quarter of 2012 compared to 4.8 percent in Q3 2011.
In Oman, it rose to 7.5 percent from 5.2 percent while the UAE saw the smallest rise from 5.2 percent in Q3 2011 to 5.4 percent.
Data for the latest survey, collected in January and February, came from more than 130 organisations across the Middle East across 25 industry sectors.
Dr Markus Wiesner, CEO of Aon Hewitt MENA, said: "Despite continued uncertainty elsewhere in the world about a return to economic growth, regional employers are showing a positive outlook overall.
"Some organisations remain wary and have continued to implement pay freezes but this development is more evident in Oman, Bahrain and Egypt, whereas the percentage of organisations doing this remains below 10 percent for leading Gulf economies such as the UAE."
He added: "We are seeing an increasing trend towards linking compensation with performance, better placing companies to engage and retain their key talent.
"Without exception, all markets have indicated that a major portion of their overall salary increase is the merit increase, which acknowledges outstanding performance."
Overall across the Middle East, Aon Hewitt said the figures told a story of cautious optimism regarding salary increases.