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UAE Salaries Are Set To Rise But Residents Could Still Struggle

UAE salaries

In its latest report, Korn Ferry said that the UAE will see pay increases of around 4.1% in 2018.

A survey we released earlier in the week suggested that over 60% of UAE residents expect a salary rise this year. And according to research by Hay Group, these people are probably right to expect that.

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In its latest report, Korn Ferry, a division of the Hay Group, said that the UAE will see pay increases of around 4.1% in 2018.

Sounds great, right? Well, yes and no. While UAE residents will certainly welcome a wage increase, and while that 4.1% rise is higher than the Middle East average of 3.8%, there’s more at play here than salary rates.

You see, Korn Ferry reckons that, in 2018, inflation – the rate at which products and services get more expensive – will be 4.6%. Essentially, this means that, in 2018, things will be 4.6% more expensive than they were in 2017.

And what that means is, even if salaries increase by 4.1%, UAE residents will still be 0.5% worse off than last year.

“With the introduction of VAT and subsequently rising inflation in the UAE and Saudi Arabia, we expect to see a drop in real wage increases across the region,” explained Harish Bhatia, associate client partner at the management consultancy.

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“The percentage of salary increase or decrease will vary by role, industry, country and region, but one thing is clear, on average, employees are not seeing the same real pay growth they did even one year ago.”

However, there is some good news in other areas. For example, the fact that rental rates continue to decline will bring some relief to UAE residents. This should mean that the inflation rates described by Korn Ferry won’t be as drastic as they seem.

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