Overall salaries in the UAE are projected to rise by 4% across industries in 2025, with 28.2% of companies planning to increase their headcount, according to Mercer’s Total Remuneration Survey (TRS). Over 700 companies were surveyed across sectors: energy, financial services, engineering, construction, real estate, manufacturing, retail and wholesale, services, life sciences, and technology. Consumer goods companies forecast the highest salary increase at 4.5%, while life sciences and technology follow with projected increases of 4.2% and 4.1%, respectively.
The report indicates that employers across sectors plan to apply uniform salary increases across all employee levels. “It is very encouraging to see a large segment of UAE employers planning to increase base salaries in 2025, reflecting a resilient and optimistic economic outlook,” said Andrew El Zein, Mercer’s UAE Career Products Leader. “In addition to increasing salaries, HR professionals should also review their housing allowances, in light of increasing housing costs in the country, to remain competitive.”
Mercer’s survey also highlights the impact of generative AI, automation, and digital transformation on the UAE’s workforce demands. According to Mercer’s Global Talent Trends, the UAE leads the Middle East in AI adoption, with 74% of people using AI weekly. CEOs in the UAE expect AI to be a key growth driver, intensifying the need for digital skills and reshaping salary dynamics. “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. “Business leaders play an important role in nurturing digital literacy and cultures that are open to change, so employees at all levels can be prepared for the future of work.”
Mercer recommends that UAE employers assess skill inventories and identify development areas to keep pace with automation and AI advancements. Creating a strong Employee Value Proposition (EVP) will also be essential to attract and retain talent in the increasingly digital landscape.
