The labour market in the UAE faces a shortage of suitable candidates, which will result in double-digit salary increases in 2023.

In late 2022, HR and recruitment industry executives said that passive employees (who are already employed) were demanding almost twice as much as they were in early 2022 due to a shortage of skilled workers.

According to Raghib Salim, general manager of Nadia Global, salary offers for new hires started rising from 20 per cent below the market last year due to a shortage of jobseekers.

According to Salim, passive candidates who had been looking for a 10-15 per cent salary increase when changing jobs gradually started demanding 25-30 per cent, while most employers consider 15-20 per cent as the norm.

According to Nadia Global, salaries will increase by 10% in 2023, compared to 5% last year.

As a result of the increasing number of vacancies and shortage of suitable candidates, as well as changes in employee expectations for work-life balance and salary increases, Nadia Global may face double-digit salary increases for the first time since 2008.

In a survey conducted by Bayt and YouGov, 53 per cent of UAE workers expect a salary increase in 2023.

57% of UAE respondents claim that their current salary package consists of basic salary and benefits, and 26% say it consists of only basic salary. Around 30 per cent of employees said that their company paid for overtime.

UAE employees are offered personal medical insurance, annual air tickets, and gratuities as their top benefits.

Are double-digit salary increases here to stay?

Bayt.com's Ola Haddad, director of human resources, said employers should treat compensation as part of an employee's reward and monitor the major factors shaping salary expectations.

Research director at YouGov Zafar Shah said that non-financial rewards can be essential differentiators when it comes to retaining talent.

According to Ian Giulianotti of Nadia Global, employers and employees need to find a suitable medium where businesses can achieve profitable growth while employees can earn a fair wage.

If the double-digit pay raise era takes hold, then employers will have to look for alternative methods to reward and recognize employees.

In the UAE, rent and petrol prices are becoming the primary drivers of inflation. "Employers should review housing and transportation allowances regularly and fairly," he said.