Dubai, UAE – October 12, 2024 – Salaries across all industries in the UAE are expected to increase by 4% in 2025, according to the latest findings from Mercer’s annual Total Remuneration Survey. The survey, which gathered insights from over 700 companies across key sectors, indicates a continued demand for talent, with more than a quarter (28.2%) of organizations planning to increase headcount next year.
The survey included companies from a broad range of industries, including energy, financial services, engineering, construction, real estate, manufacturing, retail, wholesale, services, life sciences, and technology. The findings suggest a robust economic outlook and a strong push to retain and attract skilled professionals.
Industry-Specific Salary Increases
Among the various sectors, companies in the consumer goods industry are projecting the highest salary increases, with an expected rise of 4.5% in 2025. This is closely followed by the life sciences and technology sectors, forecasting salary increases of 4.2% and 4.1%, respectively. The energy and financial services industries are aligned with the market average, anticipating a 4% rise in salaries.
Interestingly, employers across all industries plan to offer uniform salary increases for employees at all levels, reflecting a more inclusive approach to compensation.
“It is very encouraging to see a large segment of UAE employers planning to increase base salaries in 2025, reflecting a resilient and optimistic economic outlook,” said Andrew El Zein, Mercer’s UAE Career Products Leader. “In addition to increasing salaries, HR professionals should also consider reviewing housing allowances, in light of rising housing costs, to remain competitive.”
Impact of AI and Digital Transformation on the Workforce
Mercer’s survey also explored how new technologies, particularly Generative AI and automation, are influencing talent demand in the UAE. The country currently has the highest adoption rate of AI in the Middle East, with 74% of people using AI on a weekly basis. CEOs in the UAE view AI as a key driver for future growth, which is reshaping the skills required in the workforce.
Ted Raffoul, Mercer’s Middle East Career Products Leader, noted, “Generative AI and automation are rapidly transforming the job landscape, shifting the skills our workforce needs, and placing additional pressure on salaries. Business leaders have a critical role in fostering digital literacy and creating cultures that are open to change, ensuring employees at all levels are prepared for the future of work.”
As the adoption of AI and digital tools accelerates, Mercer recommends that employers assess their current skill inventories to identify gaps and areas for development. In addition, understanding hiring and retention drivers will be essential for companies to secure the talent they need for the future.
The Future of Work: Employee Value Proposition (EVP) and Retention
To navigate these technological changes and attract top talent, Mercer stresses the importance of developing a differentiated Employee Value Proposition (EVP). As the work environment continues to evolve with new technologies, companies will need to stay agile and adapt their compensation and retention strategies to remain competitive.
Mercer’s survey highlights the UAE’s commitment to investing in its workforce, with salary increases and talent acquisition strategies aimed at driving long-term growth. As companies prepare for a dynamic future, they must continue to innovate in how they attract, retain, and develop talent in an increasingly digital and automated world.
