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Will salaries in UAE, GCC increase this year amid regional conflict?
Cooper Fitch predicts flat or shrinking pay this year, while Adecco says firms are still rewarding top performers with disciplined, moderate increases
- PUBLISHED: Thu 16 Jul 2026, 2:58 PM
Employees in the UAE and GCC are expected to see a moderate increase in salaries, if any, due to tougher economic conditions amid ongoing regional conflict.
Dr Trefor Murphy, founder and CEO of Cooper Fitch, said earlier projections of 2.5 to 3 per cent salary growth are no longer realistic given weakening demand for talent and an oversupply of jobseekers in the market.
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“We projected 2.5-3 per cent growth in salaries this year. There'll be no growth this year. If anything, there'll be contraction. The demand for people has dropped down. Honestly, there's still an oversupply, there’ll be negligible growth, if any growth, flat, or slight reduction in salaries this year,” he said.
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Dr Murphy added that the days of employees switching jobs for major pay bumps are largely over, with volatility across oil, gold and diamond markets – alongside a paused IPO pipeline – weighing on business confidence.
Discretionary spending is also under tighter scrutiny, Murphy said, with travel budgets and other variable costs now requiring extra layers of approval. Performance-linked pay is expected to take the biggest hit, since bonuses are typically tied to growth and Ebitda targets that companies may struggle to meet this year.
Moderation, not stagnation
Offering a more optimistic outlook, Mayank Patel, SVP at Adecco and Head of EEMEA, said most employers across the UAE are not freezing salary increases outright, but are instead redirecting rewards towards high performers and business-critical roles.
“Despite ongoing economic uncertainties, talent attraction and retention remain key priorities across the UAE. Most employers are not putting salary increases on hold, instead, they are focusing rewards and salary adjustments on critical talent, high performers, and business-critical roles,” Patel said.
He said several companies have trimmed the size of pay rises but plan to revisit compensation in the second half of the year depending on business performance and market conditions.
Patel pushed back on the idea that 2026 will be a stagnant year for salaries, describing it instead as a period of disciplined, moderate growth as employers balance cost control with the need to retain talent.
“We do not anticipate 2026 to be a stagnant year, but rather a year of moderation and disciplined salary growth,” he said.
“Supported by the UAE's resilient economy and its proven ability to adapt and rebound strongly, both employers and employees remain focused on driving long-term, sustainable growth.”
He added that many organisations are leaning more heavily on performance-based incentives and variable pay schemes to help offset inflationary pressures while still rewarding top talent.
