UAE salary growth to increase in 2010

Throughout much of the world, stagnating or falling salaries have been an unwelcome result of the global financial crisis. However, while not immune to the financial downturn, the Middle East was impacted less than other areas, with studies reporting that salary growth in the region was among the highest in the world in 2009.

One survey, by Hewitt Associates, found that average salaries in the Middle East climbed 6.9% last year, while a separate study by Mercer revealed that salaries in the UAE grew by an average 3.4%-5.2% during the year.

Both studies, which were released in the fourth quarter of last year, were optimistic about salary rises in 2010, with Hewitt's study forecasting salaries to go up by an average of 7.9% throughout the region in 2010, and Mercer tipping salary growth in the UAE at between 7% and 7.5%.

Salary pressure

Companies in Dubai may be under the most pressure to raise salaries as they need to compete with firms in Qatar, Saudi Arabia, and Abu Dhabi, which have strong local economies and many companies that are looking to expand, Bassam Gazal, head of Mercer's survey practice in the Middle East, told AMEInfo.com.

In Qatar, GDP growth has been forecast to climb as high as 16% this year due to rising oil and gas output, while Saudi's economy has been pegged to grow about 4% on the back of higher oil prices and greater infrastructure spending.

In the UAE, strong growth in Abu Dhabi is expected to fuel a 2.5% increase in real GDP in the Emirates in 2010, according to Shuaa Capital.

Mike Hynes, Managing Partner at Kershaw Leonard, says he is seeing 'a lot more' hiring activity in Abu Dhabi than Dubai, and a general willingness by job seekers in Dubai to commute or even relocate to the capital, provided accommodation can be found.

However, the overall sentiment in Dubai remains upbeat. 'Generally there is more confidence, more activity, more things going on,' Hynes says. 'But people are still being cautious about recruiting and cautious about moving jobs.'

Hiring and salary trends in Dubai vary depending on the industry. 'Nothing has really changed in the finance and human resources areas. They were not very badly hit in 2009, and continue to remain strong for us now.

But in the construction sector, everyone is looking for a good deal. Employers want to pay lower salaries, but employees won't move for less money. So it's a bit of a stalemate. People who have a job are hanging on to it,' he said.

Resident advantage

One trend that has emerged is that job candidates who live in the emirate have a huge advantage over those living overseas. 'It's quite tough to get a position from anywhere outside of Dubai right now,' Hynes says. 'For the most part, there are a lot people who have the experience and expertise for mainstream jobs. They are a much lower risk than bringing someone in from, say, the UK.'

'Even if they have a very good CV, you have the issue of families getting placed in schools, wives not liking it, etc. A lot of clients will not entertain anyone who is not already here.'

On the other hand, Dubai is fortunate that it has so much talent already in the emirate, as the lure of the city amongst job seekers overseas has fallen. 'I think the image of Dubai has been badly tarnished, and it is no longer seen as the magnet that it once was. I do think that there will always be people who will be keen to come here, but it's not the golden goose anymore,' he said.