UAE businesses reject employee calls for salary boost amid surging inflation

Around 67 percent of companies have received requests from employees to raise their pay, a survey by global consulting firm Mercer showed, but only 16 percent of which have taken action.

Inflation in the UAE, although relatively lower than in other parts of the world, is expected to peak at 5.6 percent this year.

According to the survey, nearly half of respondents are not planning to take any action regarding employee compensation in 2022, while 37 percent of companies are considering a slight adjustment this year.

“Employers are being cautious about immediately bumping up wages to match inflation, and many are considering short-term actions with less permanent implications,” Andrew El Zein, a consultant at the MENA unit of Mercer, said in a statement.

Surging inflation is also happening in the backdrop of what industry experts call as the “Great Resignation,” where workers globally are quitting their jobs for various reasons – one major factor being salaries.

A separate survey by PBS NewsHour, NPR, and Marist revealed that high-income earners in the US were less likely to quit. Around 46 percent of people who quit their jobs in the past two years were earning below $75,000 per year.

In the UAE however, salary seems to be a minor factor in people quitting their jobs or switching to a new one. A survey by Bayt.com and YouGov showed that over seven in 10 individuals in the country considering resigning, but only 18 percent said it’s about pay.

Despite this, the Mercer study found that companies are “budgeting for highest (pay) rises next year,” El Zein said.

Companies could impose up to a five percent increase in salary in 2023, the survey showed – higher than the average pay rise in recent years of around 3 to 4 percent.

Adjusting compensation “requires a structured approach that balances employee concerns with managing a challenging and unpredictable fiscal environment,” the Mercer consultant explained.