UAE wages hike as global cost of living spirals
Salaries for expat employees working in the UAE are rising as employers look to attract and retain the best talent by comparing remuneration packages to international cost of living indexes.
Mahesh Krishnamoorthy, managing director of Core Integra, a global HR company based in India which is currently expanding to the UAE, said: “Salary levels are getting increasingly rationalised in the UAE, with employers looking at the cost of living indexes at a global level while negotiating and fixing basic salaries for expat employees.
“It used to be a simple exercise where an employer or employee could make a demand, based on demand-supply,” he said.
Krishnamoorthy said now UAE employers have started to manage rates of pay more scientifically.
The cost-of-living index for cities are calculated periodically based on prices of representative baskets of consumer goods.
The cost-of-living index for UAE is estimated at 72.3, with an average monthly income at $4,097 (£3,200) and an average purchasing power index at 88.6, while that for Saudi Arabia is at 51.8, with an average monthly income and purchasing index estimated at $2,307 and 69.6 respectively. India’s index score stands at 24.6, with an average monthly income of $199 and purchasing index at 12.6, according to figures from World Data.
Dubai emerged as the costliest city in the Middle East for international employees, ranking 15th globally – up three places from 2023 in Mercer’s annual cost of living city ranking for 2024.
Tel Aviv is the next most expensive city in the region (ranked 16th), followed by Abu Dhabi (43), Riyadh (90) and Jeddah (97).
However, Krishnamoorthy said the transition to international models for employee compensation packages are still a work in progress for companies in the UAE as most of them are still reluctant to offer perks like employee stock options or profit-linked bonuses, especially at top, senior and mid-levels.
“Even today, [at top and senior levels] it largely goes by practice of individual bargaining.
“There is an ask for equity participation or share of profit participation as happens in US and SE Asia but [companies in the UAE] still prefer the fixed compensation plus annual incentive model, with a couple of perks/benefits for senior folks thrown in,” Krishnamoorthy said.
He, however, said employers in UAE will still be able to attract a top talent pool from across the globe, even from countries like the US and Europe, besides neighbouring countries like India, as executives are looking for stable jobs and better growth prospects.
“In today’s ever-evolving global landscape, the factors that make a location attractive extend far beyond mere cost considerations,” he said.
He said while cost undoubtedly still plays a significant role, companies and employees are increasingly prioritizing other factors when evaluating the appeal of a destination.
“Factors such as quality of life, safety and security, besides the presence of robust infrastructure and seamless connectivity, have become key determinants of a location’s allure,” Krishnamoorthy said.
‘Huge influx of white-collar workers’
Last month, the Arabian Business website reported that the UAE was set to see “a massive influx of white-collar talent” from the US, UK, Europe, and other parts of the world as global companies push for staff relocation plans amidst mass layoffs.
It said industry experts predict that at least 15,000 to 20,000 white-collar workers will move to the UAE over the next three years, either through migration or relocation, across levels and roles.
“This influx of talent is expected to catapult Abu Dhabi as a major commercial hub, as many corporate majors set up or relocate their backend operations to the UAE due to the country’s fast rise as a regional hub for many services and a global hub in a few segments,” it reported.
“The anticipated surge in white-collar talent to the UAE is expected to boost Abu Dhabi as a major commercial hub. Senior executives at various hiring firms have confirmed the move, with many companies looking to set up or relocate their backend operations to the UAE as part of their cost reduction initiatives.”
Industry experts predict that the technology and financial sectors will see maximum inflow of white-collar talent, as Dubai has already emerged as a hub for many bespoke tech solutions, services, and products in the wider Middle East and North Africa (MENA) region.”
