Firms in the UAE are expected to hike salaries by five per cent next year, according to the latest figures from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc, which were released as part of its annual Global Salary Increase Survey 2013.

The figures are in line with forecasts made for 2013 and 2012, which were 5.1 per cent and 5.2 per cent respectively, indicating economic stability and continued confidence in the country’s business environment amongst  businesses in the UAE.

Looking at the distribution of salary increases, Aon Hewitt said there is a clear correlation between performance and salary increases.

Across the GCC, companies are predicting an average salary increase of 5.5 per cent for 2014, a figure in line with forecasts made for 2013 and 2012, which were both at 5.4 per cent, indicating continued confidence in the economic stability of the whole region and an increasingly resilient business environment.

Figures show that a 7.2 per cent salary increase was given for those ‘far exceeding expectations’ compared to a 0.1 per cent salary increase for employees that ‘did not meet expectations’.

Robert Richter, Compensation Survey Manager, Aon Hewitt Middle East, said: “Whilst linking individual performance to pay is not uncommon, we advise employers to use annual bonus payments as the larger component for rewarding high performers. Salary increases typically take into a consideration a number of other factors as well as performance, including inflation, rises to reflect promotions, and the need to ensure that employees at the same grade remain within a single pay band.”

Among the participating GCC organisations, Saudi Arabia-based companies gave the highest salary increase projection for 2014 at 6 per cent.

This is a slight increase on last year’s 5.8 per cent predicted raise and comes at a time when the Kingdom’s economy is growing, with economists forecasting a growth rate of 5.3 per cent for 2013.

Kuwait and Oman firms estimated a 5.6 per cent salary growth, similar to the 2013 predictions, while companies in Bahrain forecasted 5.2 per cent – an increase on last year’s 4.7 per cent projection.

Looking back to 2012 and comparing the predictions from the survey for 2013 (5.4 per cent) with actual rises awarded earlier this year (5.3 per cent), Aon Hewitt sees good alignment, allowing employees to feel confident that the trend is set to continue into 2014.

source: emirates24