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UAE talent drive continues despite rising living costs

UAE talent living costs Dubai Tourism
Despite average rent rises of 25%, interest from companies and candidates in locating in Dubai is at a record level
  • Interest in relocating to Dubai and Abu Dhabi at record levels
  • Average increase of 25% rental costs seen in Dubai
  • 40% of UAE employers report increasing housing allowances

The UAE’s talent drive continues to record strong growth despite the Gulf state’s rising cost of living.

Industry executives say that the number of overseas companies and candidates looking to join the labour market is at a record high.

“Dubai is becoming increasingly more attractive for people to move here, with record levels of new applicants for jobs – up nearly 12 percent on last year,” Trefor Murphy, founder and CEO of Cooper Fitch, a recruitment agency in Dubai, said.

Katy Holmes, general manager of the British Business Group in Dubai, is seeing record numbers of new members joining her network, with a 52 percent increase so far this year compared to last.

Recruitment has moved from the 12th biggest sector among members last year to sixth this year.

However, both Holmes and Murphy noted that increased demand for housing contributes to rising rents.

Exacerbated by other inflationary pressures, the sharp rise in the cost of living is having an impact on remuneration for people already residing in the UAE.

Business owners are having to choose between recognising talent and retaining staff or investing in recruitment to scale their workforce to meet growing client demand, Holmes said.

Rents have increased significantly in many areas, Murphy added. People are moving to areas further out of the centre of Dubai rather than employers paying staff more.

“Housing allowances are typically calculated as a percentage of basic salary – normally around 20 percent,” Murphy said. “We have not seen any change to this.”

Meanwhile, a new report ranks Dubai 18th globally for cost of living, 13 places higher than it was last year.

Rental costs have had the largest impact on its elevated ranking, with rent increases averaging 25 percent.

The Cost of Living 2023 report by New York’s professional services firm Mercer, has Abu Dhabi climbing 18 places to 43rd spot.

Rent rises have been lower in Abu Dhabi, however, averaging between 6-8 percent.

Singapore, ranked second, has seen rent increases averaging 50 percent.   

Mercer’s research observed that 40 percent of organisations surveyed in the UAE have reviewed their 2023 employment policies by increasing their housing allowances by 5-10 percent on average based on career level.

It added that many companies are also reviewing their remuneration packages. A growing number are increasing bonuses instead of base salaries, so as to improve the total compensation without long term commitment.

“Business leaders need to be aware of our people’s increasing living costs when reviewing packages and benefits,” said Stuart McCulloch, market head of the Middle East office of The Fry Group, which specialises in tax and financial planning.

“It is likely where there are 25 percent rent increases, that businesses would be unable to bridge the corresponding drop in earnings in real terms.

“You would not normally budget for these kinds of salary and benefit increases every year.

“It is not the norm for British expats, for example, to have ever experienced rent rises like these.”

If the situation continues, McCulloch added, businesses would need to consider locating some of their UAE operations elsewhere.