UAE salaries to rise 4% in 2025 on talent demand

Mercer has released findings from its annual Total Remuneration Survey (TRS), highlighting a positive outlook for the United Arab Emirates (UAE) workforce. According to the survey, salaries across all industries are projected to rise by an average of 4 per cent in 2025, with 28.2 per cent of organisations planning to increase headcount next year, signaling a growing demand for talent.

Industry-wise UAE salary hikes

The survey, which analysed data from over 700 companies across industries such as energy, financial services, engineering, retail, technology, and life sciences, revealed that organisations in the consumer goods sector are leading the way, anticipating the highest salary increases at 4.5 per cent.

The life sciences and technology sectors are close behind, forecasting increases of 4.2 per cent and 4.1 per cent, respectively.

Energy and financial services industries are aligned with the overall market average of 4 per cent. Importantly, the study found that salary adjustments will apply equally across all employee levels, reflecting a consistent approach to compensation.

Andrew El Zein, Mercer's UAE Career Product Leader underlined, ‘It is very encouraging to see that a large segment of UAE employers plan to increase base salaries in 2025, reflecting a resilient and optimistic economic outlook. In addition to increasing salaries, HR professionals should also review their housing allowances, in light of increasing housing costs in the country, to remain competitive.”

GenAI and automation reshape workforce demands

Mercer’s findings also underscored the transformative impact of generative AI, automation, and digitalisation on workforce dynamics. With the UAE leading the Middle East in AI adoption—74 per cent of residents reportedly use AI at least once a week—business leaders are focusing on preparing for a digitally driven future. CEOs in the UAE identified AI as a key growth driver, as detailed in Mercer’s Global Talent Trends.

Ted Raffoul, Mercer’s Middle East Career Products Leader added, “Generative AI and automation are rapidly transforming the job landscape, shifting the skills our workforce needs and placing additional pressure on salaries. Business leaders play an important role in nurturing digital literacy and fostering cultures open to change, ensuring employees at all levels are ready for the future of work.”

Adapting to new workforce realities

To address the challenges and opportunities presented by digital transformation, the report recommends that employers need to:

• Assess current skills: Identify gaps and areas for development in their workforce.
• Understand hiring drivers: Gain insights into what attracts and retains talent.
• Develop a differentiated Employee Value Proposition (EVP): Create compelling incentives to stand out in a competitive market.

As the UAE continues its rapid technological evolution, these strategies will be critical for businesses to remain agile and attract top talent in an increasingly digital economy.