UAE salaries still set to rise 4.6% next year

New policies governing inflation, including introduction of VAT, to fuel wage adjustments.

Dubai:  Although the economic environment has been challenging for many businesses, salaries of employees at some companies in the UAE have actually increased this year and are expected to rise over the next few years.

The latest research conducted by Aon Hewitt indicated that employers in the country are planning to increase wages of their staff by an average of 4.6 per cent in 2017. So far this year, salaries have increased by 4.4 per cent on average.

The highest increase is forecast in Saudi Arabia, at 4.9 per cent, followed by Kuwait (4.8 per cent) and Bahrain (4.7 per cent). In Oman, salaries are forecast to move higher by 4.6 per cent and in Qatar by 4.5 per cent.

The growth in monthly incomes will be fuelled by new policies governing inflation, taxation, diversification and commodity pricing.

“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,” said Robert Richter, GCC compensation manager at Aon Hewitt Middle East.

“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.”

Aon Hewitt pointed out that 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.

The International Monetary Fund had projected that real GDP growth in the region is expected to climb to 3.3 per cent in 2017, up from 3 per cent in 2016, as governments  cut back on subsidies, refocus spending on huge projects, and with the introduction of 5 per cent VAT in January 2018.