DUBAI: Salaries in the UAE are projected to rise by 4 percent across all industries in 2025, as revealed by Mercer’s annual Total Remuneration Survey (TRS).
Additionally, 28.2 percent of companies plan to increase headcount next year, highlighting strong demand for talent.
“More than 700 organisations across sectors like energy, financial services, construction, technology, and consumer goods participated in this survey,” noted Mercer. Among these, consumer goods companies anticipate the highest salary growth at 4.5 percent, while life sciences and technology firms forecast increases of 4.2 percent and 4.1 percent, respectively. Energy and financial services sectors align with the market average of 4 percent.
Uniform Pay Adjustments
In a notable trend, businesses across industries plan to offer equal salary increases for all employees, regardless of seniority. Andrew El Zein, Mercer’s UAE Career Products Leader, remarked, “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. In addition to increasing salaries, HR professionals should also review their housing allowances, in light of increasing housing costs in the country, to remain competitive.”
KEY FINDINGS
- Consumer goods industry leads with 4.5% salary growth projection
- Life sciences and technology sectors to grow at 4.2% and 4.1%, respectively
- UAE’s AI adoption rate of 74% is the highest in the Middle East
- CEOs view AI as a key driver for future growth
AI Revolution Reshaping Skills
Mercer’s findings also underscore the impact of generative AI and digital transformation on workforce demands. As 74 percent of UAE residents use AI weekly, the nation leads the region in adopting emerging technologies. CEOs in the UAE believe AI will play a pivotal role in driving growth and reshaping business landscapes.
“Generative AI and automation are rapidly transforming the job landscape, shifting the skills our workforce needs and placing additional pressure on salaries,” said Ted Raffoul, Mercer’s Middle East Career Products Leader. “Business leaders play an important role in nurturing digital literacy and cultures that are open to change, so employees at all levels can be prepared for the future of work.”
Adapting to Change
To navigate these trends, Mercer advises businesses to:
- Evaluate current skill inventories to address gaps
- Focus on hiring and retention strategies to meet future demands
- Develop a differentiated Employee Value Proposition (EVP) to stay competitive
Raffoul emphasised, “Developing a strong EVP and addressing skills shortages will be crucial as businesses adapt to evolving workforce dynamics.”
Looking Ahead
With salaries on the rise and innovation driving workforce transformation, the UAE appears well-positioned for a robust economic year ahead. Organisations are encouraged to align pay structures, assess employee benefits, and invest in skill-building to thrive in this dynamic environment.