Reducing the workforce and 10% reduction of salaries
Reducing the workforce and 10% reduction of salaries

Although 10 percent of UAE companies have cut their salaries on a temporary basis, and 30 percent have plans to cut staff, according to a survey by Mercer.


Overall, the market continues to suffer from positive salary inflation, and 25 percent of firms report an increase in productivity as a result of employees working from home.

The survey results covered more than 500 companies in the UAE, and also revealed an actual annual salary increase of 3.8 percent in the general market, although 19.4 percent of organizations indicated that they had frozen salaries in 2020.

Notably, most of the 2020 budget and salary decisions were taken early in the year, before the full economic impact of the government-imposed shutdown. About 17 percent of companies have postponed their 2020 increases due to the Covid-19 pandemic, usually by six months.

While the general market expects a salary increase in 2021 of 4 percent, industry figures vary widely. The largest expected rise came from the life sciences industries (4.5 percent) and consumer goods (3.8 percent). The energy industry continues to see its lowest salary increase with a forecast of 1.9 percent.
Covid-19 has resulted in rapid implementation of remote flexible working measures, with 66 percent of companies devising new remote working policies, while 25 percent already have one. As a result, a quarter of employers have reported an increase in productivity and expect flexible working arrangements to continue to be in place in the post-Covid-19 landscape.