Over the past three years, the Middle East has witnessed notable shifts in salary trends, reflecting broader economic dynamics, talent demand, and changing employee priorities.  From 2022 to 2024, the UAE, as a regional hub, this region exemplifies these transformations, with salary increments, challenges in pay structures, and new strategies for attracting expat talent. 

Wage trends in the region have shown steady growth across all sectors, at varying rates. According to Mercer's Annual Total Compensation Survey, salaries in the UAE are projected to grow by 4 per cent in 2025, with consumer goods leading the way (4.5%), followed by life sciences (4.2 per cent) and technology (4.1 per cent). These figures underline the strong demand for talent in sectors that drive economic diversification.

Data from Cooper Fitch's Salary Guide UAE 2024 reveals a similar picture, noting a 4.5 per cent increase in salaries in 2024 due to the strong performance of non-oil sectors and OPEC+ adjustments to oil production quotas. Such increments reflect the region’s adaptability, with 81 per cent of organisations either maintaining or raising salaries in 2023, despite global economic challenges.

However, the increases have not been uniform. Around 21 per cent of companies lower salaries in 2024, citing economic headwinds and sector-specific challenges. For instance, financial services and consulting firms are among the industries that have scaled back on annual bonuses.

In senior management, a 4 per cent salary increase translates into significant monetary gains, given the already high levels of remuneration. For example, in Dubai, where the average CEO earns AED 63,792 in monthly base salary, a 4 per cent increase would add approximately AED 2,552 per month or AED 30,624 per year. Similarly, in Saudi Arabia, where the average CEO's monthly salary is SAR 67,011, the increase would amount to SAR 2,680 per month or SAR 32,160 per year.

Challenges in salary growth

Although the trajectory of wage growth is positive, several obstacles remain. Inflationary pressures have often overshadowed nominal wage increases. Globally, real wages declined by 0.9 per cent in 2023 and, although inflation is expected to have trended lower in 2024, its lingering impact continues to influence employee expectations.

The UAE’s competitive job market has introduced complexities in talent retention. While 54 per cent of companies raised salaries in 2023, only 8 per cent offered increases above 10 per cent, indicating a cautious approach to managing compensation. Companies without aggressive pay strategies risk losing top talent to competitors, particularly in sectors like technology and energy, where specialised skills are in high demand.

Expats and financial well-being in the UAE

The UAE remains a magnet for expatriates, with salaries important in attracting global talent. A survey by Hoxton Capital Management found that 95 per cent of UAE expats feel financially better off in 2024 than a year ago, a stark contrast to the global average of 60 per cent. Salary increases have contributed to this financial uplift, alongside property investments and robust pension growth.

Despite these positive sentiments, the cost of living remains a concern, pushing expats to prioritise savings, investments, and property acquisitions. About 60 per cent of expats in the UAE consider savings a top priority, with 45 per cent focusing on investments and 25 per cent planning for retirement.

These financial dynamics are intertwined with the UAE’s lifestyle appeal. The 2024 Worldwide Wealth Survey revealed that 85 per cent of expats cited employment opportunities and quality of life as their primary reasons for moving to the UAE. Attractive pay packages, combined with a tax-free income structure, continue to position the UAE as a top destination for global professionals.

Salary Hikes in the UAE: 2022-2024

The past three years have seen a steady increase in salary increments in the UAE, reflecting economic recovery post-COVID-19 and sector-specific booms.

2022: As the UAE recovered from the pandemic, salary increments ranged between 1 and 3 per cent, influenced by inflation and the “war for talent.” The job market saw a 200 per cent year-on-year increase in vacancies, with candidates demanding 10-15 per cent salary hikes, eventually rising to 30 per cent. However, companies largely resisted double-digit pay rises.

2023: The focus shifted to retaining talent amidst inflationary pressures. Around 39 per cent of organisations raised salaries by up to 5 per cent, with 9 per cent offering 6-9 per cent increments and 5 per cent providing increases of 10 per cent or more. Talent shortages, especially for roles requiring UAE experience, kept wages competitive in key industries.

2024: Projected salary increments remain stable at an average of 4.5 per cent. However, disparities persist, with some organisations freezing pay or cutting salaries due to economic uncertainties. Nonetheless, bonuses and non-financial perks continue to supplement fixed remuneration.

Attracting and retaining talent in a competitive market

As the UAE seeks to solidify its position as a global talent hub, companies are employing diverse strategies to attract and retain top talent. While competitive salaries remain central, non-monetary benefits are increasingly influential.

Annual Bonuses: In 2023, 71 per cent of organisations planned to issue annual bonuses, often linked to financial performance. Bonuses ranged from one to six months’ salary, with sectors like consumer goods and healthcare leading the way.

Non-Financial Benefits: Companies are leveraging perks like remote work, training programs, and additional leave to compensate for modest salary increments. These benefits align with employee demands for flexibility and professional development.

Professional Growth Opportunities: Employers are emphasising career progression and skill-building to attract in-demand candidates, especially in tech and engineering roles.

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Outlook 2025 and beyond..

Looking ahead, the UAE’s salary trends are expected to mirror its economic diversification and strategic focus on sustainability and technology. Mercer projects a 4 per cent salary growth across industries in 2025, signaling continued demand for talent in emerging sectors.

Challenges remain. With increased competition for jobs, employees report feeling less empowered to negotiate pay rises. Companies must strike a balance between managing costs and offering compelling packages to secure skilled professionals.