UAE firms consider 10% hike in salaries amid rising costs

Employee requests related to compensation and allowances are increasing as inflation consistently rises in the country with fuel prices reaching an all-time high in July.

In order to retain talent, some companies in the UAE are looking at mid-term increments and increasing allowances. This included fuel stipends since prices have jumped nearly 75 per cent since January 2022.

The UAE has increased fuel prices by half a dirham per litre for two months in a row in June and July, reaching Dh4.63 per litre for Super 98 as global crude oil prices are consistently staying above $100 per barrel, especially during the Russia-Ukraine crisis. Economists have also projected higher inflation in the UAE this year as compared to last year as the economy recovers from the pandemic.

Mayank Patel, country head, Adecco Middle East, said rising inflation greatly impacts the quality of life of employees, hence, organisations are looking into ways to tackle this crisis in various ways.

“There is an observed increase in employee requests related to compensation and travel allowances due to increased fuel prices. Some companies are increasing employee allowance while others are looking at mid-term increments. There are also some special allowances provided to employees until the situation improves,” said Patel.

10% hike, 35% fuel allowance increase

In order to retain talent, Patel added that on average companies are considering a 7 to 10 per cent hike in salaries and a 30 to 35 per cent increase in fuel allowances.

Waleed Anwar, managing director of Upfront HR, said there are definitely expectations from employees to receive higher salaries due to the rising cost of living. “The pressure is on employers to increase employees’ salaries to retain their staff and also to attract the best talent to their organisations.”

Time to discuss increment with employers

He suggested that companies who are not offering higher or increased salaries need to offer better overall packages.

“Employees can expect, and should request, to have more benefits, such as work from home days, training and development in additional skills, for example in digital and technology, to bridge the learning gap,” he added.

Upfront HR managing director suggested that it is definitely a good time to bring up and negotiate a pay increase with the employer. “Inflations is a good reason for the conversation, but also the job market is very busy, there are many new openings, which would give employees more leverage to negotiate.”

Higher performers

Vijay Gandhi, regional director for Europe, Middle East and Africa at Korn Ferry, said organisations in the UAE are taking a proactive view of cost and impact and reviewing internal policies which will dictate if they pay premiums for the right talent.

Gandhi added that Covid-19 has definitely shaken up what was regarded as boring benefits such as sick leave or well-being.

“Identifying, recognising and retaining high-potential talent will be a critical factor in getting through this challenging economic storm. Companies will be looking to recruit and retain key critical individuals, as well as maximise cost efficiencies and avoid a broader fixed salary spend to counter rising inflation,” he added.

Gandhi noted that the impact of rising inflation has resulted in lower disposable income and the market is witnessing a rise in wages or allowance for high performers and high potential employees whose base salary adjustment has been in line with inflation as they need to be retained to capture growth in business.

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