Salaries to remain flat despite job market lift

The UAE job market is set to improve in 2020 following a spate of restructurings and mergers since the oil price drop of 2014, but salaries will remain “broadly flat” across most sectors, according to recruitment consultancy Cooper Fitch.

New hires in all sectors can expect an average 1 per cent increase in market salary ranges next year, according to The Cooper Fitch 2019 Salary Guide.

However, strategy positions are set for a 5 per cent increase – the most significant sectoral wage rise. Telecoms, investment management, manufacturing and technology can expect modest increases of 2 per cent. The guide’s salary ranges include basic income and all fixed allowances.

“The biggest challenge organisations face in 2020 is retaining quality staff amid hot competition from public sector organisations and other GCC countries, most notably, Saudi Arabia, as it rolls out potentially game-changing Vision 2030 reforms,” said Trevor Murphy, founder and chief executive of Cooper Fitch.

The study predicts an improvement in the employment market in 2020 on the back of favourable economic data. Foreign direct investment increased by $311 million (Dh1.14 billion) between 2017 and 2018, to $10.3bn, according to the United Nations Conference on Trade and Development.

Although the International Monetary Fund revised its UAE 2019 economic growth outlook in October to 1.6 per cent from 2.8 per cent, it projected a 2.5 per cent growth rate over the next five years until 2024. Other positives for the economy include oil prices hovering in the more stable $60 range and inflation dipping to 2.1 per cent, according to IMF figures. Abu Dhabi’s Dh50bn Ghadan 21 stimulus package is also a boon to industries and attracting higher levels of investment.

“The infrastructure, real estate, tourism and entertainment projects under way as part of Expo 2020 Dubai … are expected to significantly boost the job market and create fresh revenue streams in the months ahead,” Mr Murphy said.

Almost half (45 per cent) of respondents to Mercer’s fourth annual Total Remuneration Study in October plan to increase their headcount in 2020, while 52 per cent expect to maintain their staffing levels and only 3 per cent are considering a decrease. The percentage of employers planning to increase hiring is at its highest, compared to 40 per cent this year, 39 per cent in 2018 and 42 per cent in 2017, according to a survey of more than 500 companies in the UAE.

However, while Mercer anticipates overall base salary increases of 4.5 per cent in 2020 across all industries, Cooper Fitch’s estimates are more conservative.

“Salaries remain broadly flat across most sectors, predicting 1 per cent increase in market salary ranges for new hires in 2020 on average across all sectors,” said Mr Murphy.

Some industries may also see salary cuts, the study found, with accounting and finance and back-office banking functions reporting a slight decrease in the salary ranges offered to new hires.