The rise is an improvement on the three per cent average increase paid this year. It comes as the proportion of businesses expecting to freeze pay altogether is set to tumble from 15 per cent this year to almost zero (0.6 per cent) next year.
As many as 316 UAE firms took part in the worldwide study about salary budgets and recruitment by Willis Towers Watson, a leading global advisory, broking, and solutions company.
Some industries plan to be more generous than others. Average rises in 2022 are set to be higher in the medical technology (4.4 per cent rise), pharmaceutical (4.3 per cent), and manufacturing (4.3 per cent) sectors. Workers in insurance (3.2 per cent), business consulting (3.2 per cent), and energy and natural resources (3.3 per cent), are due to fare less well.
The war for talent has continued during the pandemic. In 2021, UAE businesses tried to motivate and retain the top performers by giving them a pay rise that was 2.7 times greater than for staff on average performance ratings.
Laurent Leclère, Senior Reward Leader for the Middle East, said pay budgets have not yet returned to pre-pandemic levels, but employers are showing clear signs of growing optimism, and they are reflecting that in their plans for higher pay rises.
"In recent months our conversations with HR leaders and clients have revealed a more upbeat sense of recovery and growth. These are positive signals in a labour market that has come under heavy stress during the global pandemic," Leclere said.
Over half (53 per cent) of UAE firms said their business outlook is ‘ahead’ or ‘well ahead’ of where they thought it would be, while just 3 per cent said it was below expectations.
And 26 per cent plan to recruit more staff in the coming 12 months, while 10 per cent expect to cut headcount. Over half (57 per cent) of firms that are recruiting said they are trying to fill roles in sales, while technical skilled trades (43 per cent) and engineering (30 per cent) are also hotspots. The least active recruitment areas are in HR (3 per cent), finance (4 per cent), and marketing (20 per cent).
"It’s significant that, across many different industry sectors, there has been a real focus on attracting and retaining digital roles. This is largely driven by changes in consumer behaviour since the pandemic started. Digital roles will keep commanding enhanced pay packages as we expect trends that started during Covid to continue or even accelerate,” Leclère added.
