UAE Salaries Set to Rise Across All Industries in 2025: Survey Reveals Optimism Amid Change

In a promising development for workers across the UAE, salaries are projected to increase by 4 per cent on average across all industries in 2025, according to Mercer’s annual Total Remuneration Survey. The report, which surveyed more than 700 companies, paints a picture of a resilient economy and an optimistic outlook for the job market in the UAE.

and Growing Demand for Talent

The survey reveals that 28.2 per cent of UAE companies plan to expand their workforce next year, signaling a strong demand for talent across sectors. Among the industries surveyed, consumer goods leads with the highest projected salary increase at 4.5 per cent, followed by life sciences at 4.2 per cent, and technology at 4.1 per cent. Sectors such as energy and financial services are aligned with the overall market average of 4 per cent.

Interestingly, employers across all sectors are expected to adopt a universal approach to salary increments, providing equal percentage increases for employees at all levels.

“It’s very encouraging to see a large segment of UAE employers planning salary increases in 2025. This reflects a resilient and optimistic economic outlook,” said Andrew El Zein, Mercer’s UAE Career Products Leader.

However, El Zein stressed that beyond base salary hikes, companies should also reassess housing allowances, given the rising cost of living, to stay competitive in attracting and retaining talent.

AI and Digital Transformation Reshaping the Job Landscape

As salaries rise, the job market in the UAE is also undergoing a transformation driven by the rapid adoption of Generative AI and automation. According to Mercer’s Global Talent Trends, the UAE boasts the highest AI adoption rate in the Middle East, with 74 per cent of individuals using AI tools at least once a week.

“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.

Raffoul emphasized that business leaders must foster digital literacy and an openness to change across all levels of their organizations. This proactive approach will help prepare employees for the future of work and mitigate the pressure caused by these technological shifts.

How Employers Can Prepare for 2025

To adapt to the changes, Mercer recommends that employers:

Assess Skill Inventories: Identify current skills and pinpoint gaps that need to be addressed.

Understand Hiring and Retention Drivers: Analyze factors that attract and retain top talent to ensure competitive advantage.

Develop a Differentiated Employee Value Proposition (EVP): Create a compelling EVP that aligns with the evolving needs and expectations of the modern workforce.

By addressing these areas, businesses can position themselves to thrive in a rapidly changing job landscape while meeting the demands of both employees and new technologies.

A Bright Outlook Amidst Change

The projected salary increases and growing demand for skilled professionals reflect positive economic sentiment in the UAE. However, this optimism is tempered by the challenges posed by rising living costs and the digital transformation sweeping across industries.

As 2025 approaches, it is clear that success will depend not just on offering competitive pay but also on fostering a workplace culture that embraces change, innovation, and employee development. With thoughtful planning and forward-looking strategies, UAE businesses can build a workforce ready to navigate the opportunities and challenges of tomorrow.