2021 UAE salary forecast: New employees to expect 2% reduction

UAE - Study finds that half of UAE firms have yet to decide about increments for staff in 2021 too

New employees should expect a slight reduction of two per cent in their salary next year due to the impact of the Covid-19 pandemic on organisations, according to a new survey of UAE companies.

Conducted by Cooper Fitch, the survey revealed that 65 per cent of firms made no change to mid-level salaries while a total of 14 per cent said they had decreased mid-level wages, compared to 12 per cent for executive hires.

A small proportion of firms said they had increased salary ranges for new hires, but, overall, almost three-quarters of companies said they made no changes to their official salary ranges in 2020.

“Almost half of the firms have yet to decide about increments for their staff in 2021 while a significant 41 per cent were undecided or didn’t yet know. Around nine per cent said they had delayed pay rises, while 30 per cent said they had decided to implement a merit salary increase, with advisory and financial services the best-performing sectors in this regard,” said Trefor Murphy, CEO and founder of Cooper Fitch.

It found that 13 per cent firms would increase mid-level salaries by up to five per cent while 17 per cent reported there remains a company-wide salary freeze.

Bonuses take a hit

High levels of uncertainty look set to impact bonus decisions, too, said Murphy.

When asked in the final quarter of 2020 whether firms were planning to pay bonuses for this year, around 30 per cent said they had not decided. One-quarter, 26 per cent, said they would not pay bonuses for 2020, and 12 per cent said they would pay them, but only partially, said Cooper Fitch.

Almost a third, 32 per cent, said they would pay bonuses – but this still left the remaining 68 per cent that either expected not to pay it or simply did not know if they would, as they approached the final month of 2020.

28% firms back in office

Almost half, 49 per cent, of businesses in the UAE continue to work on rotation between home and the office, while 13 per cent remain working from home and 28 per cent are fully back in the office, according to a new report.

Cooper Fitch survey revealed that 67 per cent companies in the UAE surprisingly made no redundancies this year.

“Advisory, technology and public sector companies were the least likely to have made redundancies. At the same time, almost a third, 30 per cent, said they had made redundancies, with 15 per cent reporting that this affected 1-9 per cent of employees, 9 per cent saying it affected 10-20 per cent of staff, and two per cent citing between 21-30 per cent,” said Cooper Fitch’s UAE Salary Guide 2021.

While just over one-third of respondents said their company had implemented a hiring freeze in 2020 across all roles, 25 per cent were still recruiting for replacement positions. Well over a quarter, 28 per cent, said there had been no changes to recruitment practices.

waheedabbas@khaleejtimes.com