Anonymous payroll data reveals modest salary increases but no planned further increments for 2021

Mercer’s Total Remuneration Survey of over 500 companies in the UAE with an average size of 700+ employees revealed an annual salary increase of 3.8 percent generally in this size bracket, although 19.4 percent indicated they had frozen salaries in 2020. Notably, most 2020 budget and salary decisions had taken place early in the year, prior to the full economic impact of the government mandated lockdown. The survey collects anonymous data from payroll information straight from the HR for these companies.

17 percent of companies delayed their 2020 increases due to the COVID-19 pandemic, typically for 6 months. According to Ted Raffoul, Career Products Leader for MENA at Mercer, the rest of the Middle East also showed similar numbers though the UAE numbers are slightly higher.

While the general market forecasts a 2021 salary increase of 4 percent, industry figures vary significantly. The sharpest projected rise has come from the life sciences (4.5 percent) and consumer goods (3.8 percent) industries. The energy industry continues to see some of the lowest increase in salaries with a 1.9 percent forecast. Raffoul pointed out that sectors such as consumer goods, life sciences, tech and logistics have been hiring.

Raffoul added, “Factors such as inflation, economic growth and competition for talent are the primary drivers behind salary increases and this hasn’t changed. Most salary increases were provided towards the beginning of the year (as usual) before many of the major lockdown measures came into force and shut the economy down.”

Raffoul does not believe the expectation to get a salary increase will be widespread.

He added, “While the market median is 3.8 percent, many companies did not provide salary increases and some actually did temporary reductions. Certain industries may have higher expectations than others, which are primarily driven but how much (or little) the pandemic affected their business performance. Basically, there’s should be a strong correlation between business performance and employees’ expectation of a salary increase.”

One of the most obvious impact of the pandemic has been the rapid digital transformation of a lot of businesses – whether in the way they service and reach their clients or how the work is being done. As a result, Mercer expects to see a lot of focus on areas such as e-commerce, but also on having the right kind of people that are able to work effectively remotely and be agile to fast changing environments. Such skills, in Raffoul’s opinion, may demand a premium due to the high competition for this sort of talent.

Mercer’s annual salary surveys are conducted regionally in over 15 countries across the Middle East and North Africa.