UAE salaries are back. Hiring is another story
The immediate fears over salary cuts have faded, but the UAE jobs market has changed. Here’s what recruitment and legal experts say about hiring, salaries and the growing impact of AI
13 August, 2026
TT
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Months after fears of salary cuts gripped the UAE during regional tensions, most employers have restored pay. But the labour market has emerged more cautious, hiring has slowed, and artificial intelligence is increasingly determining who commands a premium.
When Gulf Business first examined the prospect of salary cuts in March, businesses across the UAE were grappling with the economic uncertainty created by regional tensions. At the time, employment lawyers stressed that companies could not legally reduce salaries without an employee’s written consent, even as some employers considered temporary cost-cutting measures.
Four months later, the immediate fears have largely subsided. Salary cuts have mostly been reversed, but recruiters and employment lawyers say the UAE labour market has entered a new phase—one defined by cautious hiring, greater emphasis on job security and the rapid rise of AI as the biggest driver of salary growth.
“The market has largely stabilised, but stabilised is not the same as recovered,” says Justin McGuire, chairman of Middle East recruitment firm MCG Talent.
“Most employers who introduced temporary salary cuts or unpaid leave during the peak of the tensions have restored normal compensation, because they had to in order to retain people. But the more lasting impact has not been on salary levels. It has been on hiring volume. There are simply fewer roles in the market than there were at the start of the year, and that has shifted the entire dynamic.”
Luke Tapp, partner at Pinsent Masons, agrees that while the worst appears to be over, businesses remain selective.
“Today, the market has largely stabilised. Many employers have restored normal salary and compensation structures. However, some businesses, particularly smaller companies and those operating in sectors still affected by regional uncertainty, continue to adopt a more cautious approach.”
“Whilst widespread salary reductions are no longer characteristic of the UAE market, a small number of businesses continue to pay reduced salaries due to the ongoing economic impact of the conflict, lack of confidence in the market, or simply overcautiousness.”

Hiring, not salaries, is now the real story
If March was about whether employers could cut salaries, August is about whether they are willing to hire at all.
McGuire says most companies have quietly shifted from expansion to caution.
“The formal cuts have mostly reversed. What has quietly become permanent is caution. Companies are hiring more slowly, scrutinising every role, and thinking harder about whether they need to replace people at all.”
He says technology and AI-focused companies barely slowed hiring during the period of uncertainty, while businesses tied to government and sovereign-backed projects also remained resilient. Traditional media, agencies and some corporate support functions, however, have taken much longer to recover.
Tapp echoes that assessment, noting that businesses exposed to weaker tourism, consumer spending and regional trade have been slower to resume hiring, while technology, cybersecurity and infrastructure have led the recovery.
The broader trend is reflected across the recruitment market. Salary guides from major recruiters continue to point to selective hiring rather than broad-based expansion, with employers prioritising specialist skills while keeping overall headcount under tight control.
Job security is replacing bigger pay cheques
The uncertainty earlier this year has also changed candidate behaviour.
“There is a clear shift in mindset,” says McGuire.
“A year ago candidates were pushing hard on salary. Now I see far more people prioritising stability, staying in secure roles, being more realistic on expectations, and valuing the certainty of a good employer over a marginal pay increase elsewhere.”
“My honest advice to a lot of people right now is to hang on to the job they have. Movement for the sake of a small uplift carries more risk than it did.”
Tapp says candidates have become increasingly conscious of employment risk after witnessing temporary salary reductions and other cost-saving measures earlier this year.
“The conflict has reinforced the importance of job security and stability for many candidates.”
“As a result, recruitment specialists have reported a more cautious hiring environment, with candidates placing greater emphasis on long-term stability than salary increases.”

AI is creating a two-speed jobs market
While geopolitical tensions may have triggered short-term caution, both experts believe AI will have a far greater impact on the UAE labour market over the coming years.
“Technology and AI, unsurprisingly, are the standout. That is where the real salary growth and competition sit. Anything adjacent to AI capability is seeing upward pressure,” says McGuire.
“The story of 2026 is a two-speed market. The top end and the tech end are moving. The middle is holding its breath.”
He adds: “The single biggest structural shift underneath all of this is AI. It is quietly reshaping the middle of the workforce, and that, more than the geopolitics, is what will define salaries and hiring here over the next couple of years.”
Tapp identifies banking and financial services, fintech, AI, machine learning, cybersecurity and renewable energy among the sectors continuing to command salary premiums, while traditional media, marketing, administrative support and non-specialist corporate services remain under pressure.
That view is reinforced by PwC’s latest AI Jobs Barometer, which found the UAE has become one of the world’s fastest-growing AI talent markets. AI-related job postings have more than tripled since 2021, while employers across industries are increasingly paying premiums for AI-related skills as adoption spreads beyond technology companies.
Performance over fixed pay
Rather than offering across-the-board salary increases, employers are increasingly redesigning compensation packages to balance talent retention with cost control.
“There is a clear move toward performance-linked and variable pay rather than simply lifting base salaries,” says McGuire.
“Employers want to protect themselves against uncertainty, so they are structuring more of the package around bonuses, retention incentives and performance triggers.”
“For strong candidates this can actually be an opportunity. If you back yourself to deliver, a well-structured variable package can outperform a flat salary. But it does shift risk onto the employee.”
Tapp says employers are increasingly competing through broader benefits rather than headline salary increases.
“Rather than blanket pay increases employers are competing on the overall value of their offer, including benefits such as flexible working, mental health support, wellbeing programmes, learning and development budgets etc.”
Looking ahead, neither expert expects widespread salary inflation before the end of the year.
Instead, they see a labour market where specialist expertise continues to command higher pay, employers remain disciplined on hiring, and AI—not geopolitics—becomes the defining force behind future salary trends.
As Tapp puts it: “The structural drivers of UAE employment such as the AI Strategy 2031 and financial sector growth remain firmly intact and continue to underpin long-term demand for skilled professionals. The principal risk is not a structural pay cut but a prolonged pause in headcount growth.”

























