Home » UAE firms resist demands for higher wages as inflation soars By Reuters

UAE firms resist demands for higher wages as inflation soars By Reuters

by archyde

© Reuters. The Emirati flag flies on a boat in the Dubai Marina. Photo from the Reuters archive.

DUBAI (Reuters) – Companies in the United Arab Emirates are largely resisting demands for higher wages to offset the impact of inflation, according to a survey that showed two-thirds of companies received requests for salary increases.

Mercer said in a survey it conducted on inflation in the UAE for the year 2022, which included 200 international and local companies, that only 16 percent of these companies took some measures, such as paying lump sums, unincorporated salary increases, or increasing housing allowance as they sought to retain distinguished workers.

The UAE Central Bank expects the inflation rate to reach 5.6 percent this year, which is lower than its counterpart in other countries of the world, but it will be the highest rate the country has witnessed since 2016.

Mercer also said in a separate survey that Dubai, the commercial hub of the UAE, is one of the most expensive cities for expats to work and reside in the country this year.

Despite this, 47 percent of companies in the UAE do not intend to take any action in 2022, while 37 percent are either considering or intending to provide some form of non-salary increases.

Business activity in the UAE is expanding strongly, with the non-oil private sector growing at its fastest pace in 38 months in August, increasing the need for companies to retain high-quality workers to meet rising demand.

“Employers are cautious about raising wages immediately to keep pace with inflation,” Andrew El-Zein, chief consultant at Mercer, said in a statement. By introducing a system that better balances work between work and life, in addition to being flexible and providing training opportunities.”

“After the above, companies are budgeting higher increases for the next year, which ultimately allays employees’ fears of inflation and is in line with expectations of higher wages,” he added.

Mercer said companies in the country are considering a five percent salary increase in 2023, up from three to four percent in the past few years.

(Prepared by Noha Zakaria for the Arabic Bulletin – Edited by Ayman Saad Muslim)

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