UAE salaries forecast to grow by 4.6% in 2017

Salaries for employees in the UAE are projected to rise by an average of 4.6 per cent in 2017 – higher than the hike this year, according to a new survey.

The latest GCC Salary Increase survey conducted by Aon Hewitt found UAE firms saw an average wage growth of 4.4 per cent in 2016.

Overall, salary earnings will increase by an average of 4.7 per cent across the GCC in 2017, it found.

In 2016 the region saw an average salary increase of 4.3 per cent, which although positive, is down from an anticipated 5 per cent increase for the year.

Wages across the region have been largely influenced by fluctuating oil prices and initiatives to diversify national economies.

“While 2016 proved to be a challenging period for economic expansion in some markets, over the next few years new policies governing inflation, taxation, diversification, and commodity pricing are anticipated to come into effect and lead to a general upswing in GCC salaries,” the report stated.

“Moreover, the impact of lower oil prices and reduced public spending has not had the detrimental impact that some have anticipated, with most employers surveyed increasing the salaries of their employees this year and planning for even greater increases next year,” it added.

Companies in Saudi Arabia projected the highest growth in salary increases in 2017 at an average of 4.9 per cent – up from 4.6 per cent this year.

Meanwhile Kuwait-based organisations have estimated salaries to rise by 4.8 per cent next year compared to 4.3 per cent in 2016.

Employees in Bahrain can anticipate an average salary hike of 4.7 per cent, down from 4.8 per cent for this year.

In Oman, the forecast for 2017 has risen to 4.6 per cent, up from 4.2 per cent in 2016, the report found.

Although companies in Qatar have again predicted the lowest increase in the Gulf region at 4.5 per cent for 2017, it is much higher compared to the recorded salary growth of 3.6 per cent this year.

In terms of sectors, the report found that actual salary increases for 2016 have been the highest for pharmaceutical, media and the food/beverage/tobacco industries.

The industries with the lowest salary increases for 2016 include telcos, construction, and oil and gas – although salaries in each of these three sectors are expected to rebound year-on-year in 2017.

Robert Richter, GCC Compensation Survey manager, Aon Hewitt Middle East, said: “Lower oil prices are likely to continue moderating the GCC’s economic growth this year, but a refreshed focus on non-oil sectors along with sustained programs of state investment should underpin GDP expansion into 2017.

“Of course it is important to remember that HR salary projections are subject to change. However, the latest predictions for 2017 salary increases do fall in line with the general economic climate with signs of optimism on the horizon.”