Recent research by Adecco, a global HR solutions firm, reveals that around 60% of employers in the UAE chose to maintain their staff’s salaries and bonuses at existing levels during the first half of 2024. Instead of increasing base salaries, these employers focused on providing additional allowances to retain their talent.
The study found that approximately 24% of UAE employers are utilising alternative compensation strategies to attract and keep top talent. Benefits such as housing bonuses, annual bonuses, and various other allowances have become more common, enhancing overall compensation packages without raising base salaries.
Employers often prefer not to increase base salaries to avoid additional gratuity costs, which do not apply to allowances. As 2024 progresses, employers are likely to continue navigating the global economic landscape by using strategic bonuses, allowances, and other benefits to attract and retain top talent. While salary increases may be slower compared to previous years, these compensation strategies will remain crucial for recruitment and retention.
Inflation, fluctuating consumer spending, and a shift towards cost optimization through automation and digital transformation are contributing to a more conservative approach to salary increases. Sectors such as information technology, retail, banking, and financial services have experienced slower salary growth from January to June 2024.
Additionally, a July study by Adecco indicated that about 67% of UAE employees are considering an immediate job switch. This trend is driven by factors including limited career progression, uncompetitive pay, rising living costs, poor work-life balance, inadequate benefits, and lack of work flexibility.
Following the Covid-19 pandemic, the UAE saw significant population growth and economic expansion, resulting in more job opportunities across various sectors. This increase in talent supply has lessened the pressure to raise salaries in industries with an oversupply of candidates. Conversely, companies with high-demand skills or niche expertise are more inclined to offer bonuses and allowances to retain essential employees.
The study highlights the importance of a strategic compensation approach tailored to the unique needs of each industry, balancing talent supply and demand effectively.
