COVID-19 had lesser-than-feared impact on employee salary: Survey

By Rahul Vaimal, Associate Editor
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The direct effect of COVID-19 on the environment of compensation and benefits was less serious than what was initially feared, according to a Mercer survey.

Overall, there was still positive wage growth in the economy and 25 percent of firms registered a rise in productivity as a result of employees working from home, it said.

Study findings

Even though 10 percent of UAE firms have reduced wages on a temporary basis and 30 percent have plans to reduce employee count.

The survey, which covered over 500 organizations in the UAE, found that there has been an actual annual pay rise of 3.8 percent in the general market, covering more than 500 organizations in the UAE, while 19.4 percent of organizations revealed that they froze salaries in 2020.

Notably, much of the 2020 budget and wage decisions were made early in the year, prior to the full economic effect of the lockdown mandated by the government. Owing to the COVID-19 pandemic, about 17 percent of businesses postponed their 2020 rises, commonly for six months.

While the general market expects a 4 percent pay increase in 2021, industry estimates differ considerably. Life sciences (4.5 percent) and consumer goods (3.8 percent) industries have seen the highest expected growth. With a 1.9 percent estimate, the oil sector continues to see some of the lowest wage rises.

66 percent of organizations are implementing new remote working policies as COVID-19 resulted in the rapid adoption of remote and flexible working steps. Meanwhile 25 percent of the companies already had such policies in place. A quarter of employers have noticed an improved efficiency and expect flexible working arrangements in a post-COVID-19 landscape to continue to stay in place.

Ted Raffoul
Ted Raffoul
Career Products Leader
Mercer – MENA

“It is very encouraging to see that despite the economic challenges, a significant number of UAE employers have increased salaries in 2020. In response to the business effects of Covid-19, 10 per cent of companies reduced salaries, but almost all of these were on a temporary basis. Although uncertainty continues into 2021, UAE companies are making progress towards enhanced business strategies, with a majority of them expecting new working arrangements to continue to evolve towards permanent policies.”

Although 30 percent of organizations expected an average 10 percent decrease in headcount in 2020, the extent to which businesses took this form of action varies depending on their industry and resilience to the effects of COVID-19, with the retail sector reporting the largest decrease in headcount.

There was a rise in headcount in the logistics sector in 2020, especially for express distribution and last mile delivery, in order to meet the high demand generated by the national stay-at-home orders and subsequent eCommerce boom.

Carolina Vorster, Workforce Products Leader, MENA at Mercer said, “Even though we expect uncertainty to span into 2021, the Total Remuneration Survey results promise a more optimistic new year as companies are increasingly reporting positive hiring sentiments compared to those indicated at the onset of the COVID-19 pandemic.

Companies continue adapting to the new normal with 55 percent of them anticipating keeping flexible working arrangements once the pandemic is over and have employees have proved their commitment towards employees by offering home subsidies for remote workers such as online learning, covering the cost of office set up and furniture, mobile phones and more.”


Mercer is an American human resources consulting firm. It is the world’s largest outsourced asset manager with over $300 billion outsourced assets under management and $15 trillion under advisement in total.