The upward trend in the economy is spurring demand for talent with employers readdressing hiring, retention and compensation strategies.
UAE businesses are set to hike salaries and accelerate hiring as the economic rebound spurs demand for talent.
Mercer’s 2021 Total Remuneration Survey (TRS) demonstrates the need for companies to address their compensation and benefits strategies to attract and retain talent amid an increasingly competitive talent landscape, spurred by a post-COVID-19 pandemic economic rebound.
The 2021 survey shows that hiring is rising due to the promising economic recovery experienced in the UAE with companies reporting an intention to hire for more new roles than in 2020.
This rebound is shifting the talent landscape with employees having more options resulting in employers rethinking their talent, compensation and retention strategies to mitigate the risk of a talent war, particularly in high-demand skill-sets following the augmented post-COVID-19 pandemic landscape.
The rise in both GDP and inflation in the UAE demonstrates positive market sentiment, spurred by the UAE’s swift deployment of its COVID-19 vaccination programme and the increased tourism brought about by EXPO 2020.
With increased competition employers are swiftly re-addressing their compensation and benefits strategies in order to attract and retain top talents. Mercer’s TRS shows that companies are increasing their focus on long term incentives plans, particularly for executives and those with experience in specialised fields. A key benefit that employees are seeking is that of flexible working, which has been in demand globally.
Andrew El Zein, associate, career, MENA at Mercer said: “Signs of growth abound and are evident in the increased hiring activity that we have seen in 2021 and the positive forecast for 2022. Employers are priortising hires for in demand skillsets that will support future business growth, however the talent pool is still developing, causing somewhat of a talent war.
“To attract and retain top talent employers must look to maintain pace with market-wide salary growth and benefits. Optimism is strong when looking at 2022 with many UAE companies forecasting a higher wage increase in order to attract and retain top talent, particularly in competitive fields.”
For 2021, Mercer’s TRS research of 599 companies in the UAE Mercer’s TRS findings suggest an overall salary increase of 3.6 percent, which is slightly below 2019 and 2020 figures of 4.5 percent and 3.8 percent respectively. However, 14 percent of companies froze salaries in 2020, while in 2021 it went down to 10 percent. For 2022 we expect only 5 percent of companies to freeze salaries.
The study also shows that technology and energy industries are lagging slightly at 3.5 percent and 3.4 percent respectively. The industries predicted to outpace growth are life sciences and consumer goods at 4 percent as a result of the robust performance of the sectors during the pandemic.
When looking to 2022, there are clear signs of economic optimism with TRS respondents suggesting that we see an annual increase aligned to pre-pandemic levels with all industries expected to average a 4 percent increase. For 2022, industries that will be aligned to the 4 percent increase include high-tech, life science, and consumer goods. Conversely, energy salary increases are expected to be slightly lower at 3.8%.
Ted Raffoul, career products leader, MENA, said: “This year’s Total Remuneration Survey shows positive sentiment toward hiring trends and salary increases although not quite at pre-pandemic levels. Companies must focus on continuing to provide flexible working models to employees in order maintain a strong proposition as an employer.”
Executive compensation trends in the GCC
Within the region, we are seeing increasing interest in developing attractive long-term incentive (LTI) plans to attract and retain top executives. A key driver in growth of LTI plans is the rise of successful start-up ecosystems in the Middle East that require world-class talent. Mercer’s TRS shows that 28 percent of companies in UAE have an LTI plan, which are increasingly important to attract senior talent.
Pay for Skills Practices
Only two in five HR professionals know the skills needs of their organisation and only 9 percent of companies formally monitor the market demand and availability of skills. Amid a rapidly changing market brought about by increased digitalisation, employers must reskill employees and focus on compensation that is focused on pay-for-skills, which ties the career and pay advancement of employees to their skills progression.
Raffoul said: “Companies are scrambling to find ways to pay for the skills sets they need to support their accelerated digital transformation agenda. However a few companies have developed interesting systems to link pay to the attainment of skills required by the business, and we expect many more to adopt similar practices soon.”
Mercer’s annual salary surveys are conducted regionally in over 15 countries across the Middle East and North Africa. In the UAE specifically, 599 organisations were surveyed across all industries, including manufacturing, retail and wholesale, high tech, chemicals, consumer goods, life sciences and energy.
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)