UAE salaries expected to rise 4% in 2025

Salaries across all industries in the UAE are expected to increase by an average of 4% in 2025, with over a quarter (28.2%) of organizations planning to expand their workforce next year, according to Mercer’s annual Total Remuneration Survey (TRS).

The survey, conducted by the Marsh McLennan-backed consultancy, analyzed responses from over 700 UAE companies across various sectors, including energy, financial services, engineering, construction, real estate, manufacturing, retail and wholesale, services, life sciences and technology.

Salary trends across industries

The consumer goods sector is forecasted to lead with the highest salary increase at 4.5%. The life sciences and technology sectors follow with projected rises of 4.2% and 4.1%, respectively, while energy and financial services align with the market average of 4%. Employers across industries indicated plans to provide uniform salary increases for employees at all 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. In addition to raising salaries, HR professionals should also revisit housing allowances to stay competitive amid rising housing costs," Mercer’s UAE Career Products Leader Andrew El Zein said.

Impact of AI and technology on workforce needs

Mercer’s survey also explored the growing influence of generative AI, automation, and digital transformation on workforce demands. With the UAE leading AI adoption in the Middle East — 74% of residents use AI at least once a week—business leaders anticipate AI to be a key driver of future growth, according to Mercer’s Global Talent Trends.

Mercer’s Middle East Career Products Leader Ted Raffoul highlighted the challenges and opportunities presented by emerging technologies: “Generative AI and automation are rapidly transforming the job landscape, shifting the skills our workforce needs and placing additional pressure on salaries. Business leaders must nurture digital literacy and foster cultures open to change to prepare employees for the future of work.”