Employee salaries in the UAE are predicted to rise by up to 7.5 percent in 2010, according to a new survey of more than 100 companies.
The survey from the global HR consulting firm Mercer revealed that most firms (90 percent) said they will be raising salaries in 2010.
The Total Remuneration Survey (UAE) of more than 100 firms with close to 23,000 employees said base salaries will increase by between 7 and 7.5 percent in 2010.
The survey findings also highlighted the unpredictability of the past 12 months.
In mid-2008, firms said they were forecasting 2009 salary rises of close to 10 percent. Yet in fact, firms reported that base pay across the UAE rose by an average 3.4-5.2 percent during the year.
“Although the rises reported in 2009 were less than expected, the fact that many companies are planning to increase salaries by over seven per cent during 2010 is extremely promising for the region,” said Bassam Gazal, head of Mercer’s survey practice in the Middle East.
The UAE results compared well against a range of base salaries worldwide during 2009, most of which showed only marginal growth, Mercer added.
The survey also showed that Abu Dhabi’s housing allowances were significantly higher during 2009 compared to Dubai, while executive remuneration packages tended to be higher in local firms than in multinationals.
Total remuneration packages were higher across all levels in Abu Dhabi in 2009 compared to Dubai, the survey added.
Demand for UAE nationals continued to outstrip supply and employers continued to pay a market premium for their services, it said.
The survey also provided further evidence of a trend of companies moving to increase the variable component of salary packages, with increases in the target bonus and maximum bonus as a proportion of the remuneration mix.
“Our clients want to link reward to performance more closely than in the past, and that means changing the way bonuses are issued,” added Gazal.
Mercer’s results also reinforced earlier indicators that a mood of “cautious optimism” continued to gain momentum as employers plan for 2010.
Close to two-thirds of survey respondents said they were planning to increase headcount during 2010, while the remainder (39 percent) said headcount levels would stay as the same.