UAE salaries up 4% in 2015 despite oil price slide

Salaries across the United Arab Emirates rose by an average of 4 per cent so far this year, slightly below the expected forecast of 5 per cent, a new survey by management consultancy Hay Group.

The results were drawn from a poll of 434,000 employees from 693 companies.

Although salaries registered growth, the spending power of employees rose only negligibly by 1 per cent during this period. The survey attributed this to rising inflation, which grew to 3 per cent as a result of the fuel price deregulation and an increase in rents.

Meanwhile pay packages of senior executives grew 3 to 8 per cent this year, indicating a competition for talent at the senior levels.

Among sectors, the automotive and retail industries saw the biggest growth in salaries at 6.4 per cent and 6.6 per cent respectively.

“The automotive and retail sectors traditionally tend to pay lower than the market averages with employees typically earning 15 to 18 per cent less than the all-industry average,” said Hay Group’s regional manager Harish Bhatia.

“These increases see the sectors playing catch up as competition for talent has grown whilst companies in higher-paying sectors, such as oil and gas or financial services, awarded more conservative increases in light of the uncertain global economic scenario.”

Salaries in the UAE are yet to be impacted from the volatile oil markets and slowing global growth, he added.

“Companies are treading with caution and we predict a more conservative approach to both general spending and future investment plans in both private and public sector organisations in the coming year,” said Bhatia.

“Approximately 90 per cent of companies paid on or above target bonuses this year which is relatively high by global standards and could be interpreted as a positive sign for the UAE economy. However, we would expect to see a decrease in the levels of variable pay in 2016 if business performance does slow down.”

Despite the possibility of an economic slump –mainly due to falling crude prices and a slowdown in growth- the forecast for salaries in the UAE remains largely optimistic.

A recent survey of human resources professionals by consultancy Robert Half showed that nearly a half of those polled expected to give a salary increase of at least 5 per cent in the second half of this year.

But experts have also warned that a steeper slide in oil price could further dampen prospects of bigger pay cheques.