Salaries in the UAE are expected to rise by 4% across all sectors in 2025, with 28.2% of organizations planning to expand their workforce, signaling a strong demand for skilled professionals, according to a recent survey.

Mercer's annual Total Remuneration Survey, which polled over 700 companies across various industries including energy, financial services, engineering, construction, real estate, manufacturing, retail, wholesale, services, life sciences, and technology, revealed these projections. The consumer goods sector is anticipating the highest salary hike at 4.5%, followed by life sciences and technology at 4.2% and 4.1%, respectively. Meanwhile, energy and financial services sectors are set to match the market average with 4% increases.

Employers across all industries also plan to offer uniform salary increments to employees at all levels. "It is heartening to observe that a significant portion of UAE employers are planning to boost base salaries in 2025, indicating a robust and optimistic economic scenario. Besides salary hikes, HR professionals should also consider adjusting housing allowances due to rising housing costs to stay competitive," commented Andrew El Zein, Mercer's UAE Career Products Leader.

The survey also delved into the effects of Generative AI, automation, and digital transformation on the demand for skilled talent. The UAE leads in AI adoption in the Middle East, with 74% of the population using AI weekly, and CEOs in the UAE view AI as a key driver for future growth, according to Mercer's Global Talent Trends report. Ted Raffoul, Mercer's Middle East Career Products Leader, noted, "Generative AI and automation are significantly altering the job landscape, necessitating new skill sets and putting additional pressure on salaries. Business leaders must foster digital literacy and a culture open to change to prepare employees for the future of work."

To adapt to new technologies, Mercer advises employers to evaluate their current skill sets to identify gaps and areas for improvement. Understanding the factors influencing hiring and retention is also crucial to ensure future skill requirements are met. Developing a distinctive Employee Value Proposition (EVP) will be essential in this evolving landscape.

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