Our Salary Guide 2025 provides in-depth salary benchmarks and market insights specifically tailored for employers and HR leaders in the UAE and KSA. Both markets are experiencing dynamic changes as their economies grow and diversify. This detailed research explores key compensation and benefits trends for 2025 in the UAE and KSA, integrating insights from Tuscan Consulting's GCC Compensation & Benefits Survey and other key industry players. Below, we integrate these expert insights into key areas of salary benchmarking, inflation impact, executive compensation, incentive plans, and pay equity – for a detailed, research-backed analysis.
The broader compensation trends in the UAE and KSA are shaped by post-pandemic economic recovery, talent shortages in key sectors, nationalization strategies and inflation dynamics:
• Surge and Plateau in Salary Increases: The years 2022-2024 saw a general surge in salaries as both economies rebounded from the pandemic and faced talent wars. Global data shows that in 2023, average actual salary increases reached 5.4% worldwide (vs. ~3% pre-2020) and nearly half of employers ended up budgeting more for raises than initially planned. The Middle East followed this trend, with many companies implementing higher-than-normal salary raises in 2022 and 2023 to retain staff amid strong economic growth (oil price windfalls in KSA, Expo 2020 and a tech boom in UAE) and rising cost of living. However, this trend is moderating slightly in 2024–2025, companies are recalibrating pay levels after the post-pandemic spike, aiming to balance cost control with the need to stay competitive. For instance, WTW’s Salary Budget Planning Survey shows 2025 pay rise projections of 5.4% in the Middle East & Africa region, a slight dip from 2023 levels. In the UAE, Mercer’s latest Total Remuneration Survey finds salaries are projected to rise about 4% in 2025 on average, following an estimated 4.5% average increase in 2024. This signals cautious optimism – employers are granting raises to stay competitive, but few are splurging with double-digit increases. In KSA, there’s a bit more variance in 2025 forecasts: one survey (Cooper Fitch) predicts a modest 2% average increase in Saudi salaries in 2025, citing that companies may feel salary levels are already quite high after years of rapid growth. In contrast, Mercer’s data predicts around 4% salary hike in KSA for 2025 across industries. The discrepancy reflects different sample pools, but generally suggests Saudi employers are a bit more conservative on fixed pay going into 2025, especially as many believe they’ve “priced in” the necessary increases over the past 5–6 years of transformation. Notably, nearly 50% of organizations in KSA did increase salaries in 2024, with around 8.5% of firms giving pay hikes above 10%, a sign that while the average increase was around 4%, a subset of companies made significant adjustments for key talent. In both countries, organizations that held back on raises represent a minority; for example, Tuscan’s 2024 Survey found 64% of GCC companies raised salaries in 2024, while virtually none implemented outright salary cuts in 2024. This underscores that the direction for 2025 remains upward, albeit with moderate growth in fixed pay.
• Talent Scarcity and Competitive Offers: Ambitious national projects – like the UAE’s digital economy push and Saudi’s Vision 2030 megaprojects are fueling a war for talent in fields such as technology, infrastructure, tourism, and renewable energy. Employers are leveraging compensation strategically to attract and retain employees with these in-demand skills. In 2024, there was increasing use of sign-on bonuses and retention bonuses in the UAE and KSA, especially for executives and tech talent. Companies are willing to guarantee a portion of bonus or even buy out candidates’ unvested equity from previous employers – practices that were less common in the region a few years ago but are now necessary to secure top talent. For instance, several large family businesses in the UAE have implemented phantom stock or profit-sharing plans to tie high-potential managers to the company for the long haul. In Saudi Arabia, firms setting up operations in NEOM or Riyadh’s burgeoning financial district often offer premium expatriate packages (high base pay plus substantial housing, schooling, and travel allowances) to lure experts. Tuscan Consulting’s data indicates about 36% of employers now provide differentiated compensation for roles requiring high-demand skills (such as AI, data science, or digital transformation roles), whether through higher salary bands, special allowances, or one-time incentives. This trend of targeted pay premiums ensures critical skill gaps are filled, even if it means breaking traditional pay scales. Conversely, roles that are easily available in the local talent market (or sectors facing slow growth) are seeing more subdued compensation growth, as companies redirect budget to the hot jobs. This bifurcation is evident in KSA where, for example, wages in sectors like logistics, transportation, supply chain, and green energy could rise by over 10% in 2025 due to talent scarcity, whereas industries like heavy manufacturing, hospitality, or routine back-office roles are expected to see minimal (0–4%) pay growth.
• Nationalization and Localization of Workforce: Both UAE and Saudi Arabia continue to implement policies to increase the participation of local nationals in the private sector. These policies (Emiratization and Saudization) are indirectly influencing compensation structures. Companies often need to offer attractive salaries and benefits to entice nationals to join or stay (since public sector roles have historically paid well with strong benefits). There is also an increased focus on pay parity between expatriate and national employees in government-related entities, especially in the UAE. Organizations are auditing their pay practices to ensure local hires are not disadvantaged (and in many cases, top local talent may command a premium). Saudi Arabia has set minimum wage guidelines for Saudi nationals in certain sectors (for example, a SAR 4,000 minimum for Saudis to count towards Nitaqat quotas), which has effectively raised the floor for pay in many entry-level roles. These localization efforts mean companies must budget for competitive salaries for national talent or risk non-compliance. In 2025, we expect more companies to formalize two-track strategies: one to attract and develop national talent (with clear salary growth pathways, perhaps faster promotions or scholarships), and another to ensure critical expatriate hires are offered compelling packages that include allowances and perks that matter to them (e.g. housing, tax-equalisation, etc.). The net effect is an overall uplift in compensation costs, but with a smarter segmentation of where the money is spent.
• Regulatory Compliance and Labor Reforms: New labor laws and economic reforms in both countries are shaping employer strategies. The UAE’s updated labor law (Feb 2022) introduced flexible working models, anti-discrimination clauses, and equal pay for equal work for men and women, reinforcing that employers must ensure fairness in compensation. While enforcement is still in early stages, progressive companies are proactively conducting pay equity analyses to preempt any issues. Saudi Arabia has also modernized many labor regulations – for example, eliminating the kafala (sponsorship) system restrictions and updating contract frameworks, making it easier for employees to move between companies. This increases mobility and puts pressure on employers to offer competitive pay and benefits to retain staff, since employees in KSA are now less “locked in” than before. Additionally, as part of Vision 2030, KSA has been enhancing worker rights (like improved leave policies, a wage protection system to ensure timely pay, etc.), which collectively raise the standard for how employees expect to be compensated and treated. The bottom line is that in 2025, employers in UAE and KSA must stay agile with their compensation strategies – adjusting to economic signals and policy changes – or risk losing talent to those who do. Whether it’s through benchmarking data, specialist incentive schemes, or policy compliance, compensation strategy is now a critical element of business planning in the region.
Executive pay practices in 2025 are shifting to balance performance incentives with new stakeholder expectations. Leading surveys highlight several global trends in structuring executive pay, stock options, and long-term incentives that are increasingly influencing both UAE and KSA companies:
• ESG-Linked Pay and Transparency: A growing number of companies tie executive rewards to Environmental, Social, and Governance (ESG) goals. Over half of S&P 500 firms now include ESG metrics (like diversity or sustainability targets) in incentive plans, reflecting a sharp rise from previous years. Consultants note that “ESG is here to stay” in executive pay design, with boards focusing on which ESG factors hold the most strategic value. This means CEOs and senior leaders are increasingly accountable for human capital outcomes, diversity, and climate impact through their bonus and equity plans. Enhanced disclosure rules in the US and EU are pushing companies to be more transparent about pay-for-performance alignment and equity award timing. While UAE and KSA are not mandating such disclosures yet, large organizations in these countries are voluntarily adopting ESG-linked incentives to align with global best practices and investor expectations. For instance, many Gulf-based banks and multinationals now include ESG or sustainability milestones in CEO scorecards. In Saudi Arabia, as Vision 2030 drives a focus on sustainability and governance, we expect to see more Saudi firms, especially those with international investors or listings, integrate ESG targets into executive pay.
• Expanding Equity Participation: Equity compensation is no longer reserved just for the C-suite. Korn Ferry experts observe a “little-noticed but important shift” toward offering stock awards to a wider group of employees beyond executives. A Conference Board report predicts 6% growth in equity compensation in 2025 globally, as firms broaden stock option and share grant eligibility. Many companies are introducing recognition equity programs, granting ad-hoc stock awards to high performers or critical-skill employees, projected to grow by 14%. The rationale is to foster an ownership culture and boost retention: when more employees have skin in the game, engagement rises and turnover slows. It also helps firms manage cash flow, as equity grants can be used in lieu of large cash raises during times of earnings pressure. In the GCC region (UAE and KSA), where many businesses are family-owned, government-owned, or pre-IPO, we see growing interest in cash-based long-term incentive plans and “phantom” equity to mimic the retention benefits of stock for senior leaders. In the UAE, some mid-sized tech firms have begun offering shadow equity or ESOPs to attract talent, despite not being publicly listed. In Saudi Arabia, the wave of IPOs and the growth of the Tadawul stock market have enabled more companies to grant real equity; meanwhile, state-owned giants are exploring profit-sharing schemes. Both countries are gradually moving toward a more equity-heavy compensation culture for key roles, aligning with global trends.
• Optimal Pay Mix and Cautious Salary Increases: The mix of base salary, annual bonus, and long-term incentive (LTI) in executive packages is receiving closer scrutiny. WTW data shows that in mature markets like the US and UK, median CEO pay is heavily weighted toward incentives (LTI awards can be 5–6 times base salary for US CEOs on average). In contrast, emerging markets executives, including in the GCC, have historically had a higher portion of fixed pay and generous allowances. Companies in the UAE and KSA are gradually aligning executive pay mix with global norms to ensure competitiveness and pay-for-performance. However, economic uncertainty has introduced caution: even at the executive level, firms are moderating fixed pay growth and relying more on performance-based pay. WTW’s latest pulse finds that while 96% of companies globally increased salaries in 2023 (vs. just 63% in 2020), while many had given smaller raises in 2024. Boards remain committed to rewarding performance but are wary of locking in excessive fixed costs if market conditions turn volatile. This cautious approach is evident in the Gulf as well – for example, some Saudi conglomerates, despite record profits, kept 2024 executive base pay flat, preferring to reward via larger bonus pools if stretch targets are met. The emphasis is on pay-for-performance calibration, ensuring bonuses and LTI payouts reflect real results and shareholder value created, without overly inflating fixed salaries.
• Policy and Labor Market Dynamics: Localization programs (Emiratization in UAE and Saudization/Nitaqat in KSA) mean companies must compete for a limited pool of qualified national executives. Both countries are seeing high demand (and premium pay) for leaders who can drive large-scale transformation projects – e.g. digital initiatives in UAE’s government or giga-projects like NEOM in KSA. Executive compensation packages are being tailored with long-term incentives (like deferred bonuses or retention bonuses) to lock in these leaders for the duration of critical projects. In Saudi Arabia, some Public Investment Fund (PIF) companies have offered world-leading executive salaries to attract global talent, with the founder of one consultancy noting a CFO in KSA might now earn more than counterparts anywhere in the world. Overall, 2025 will see UAE and KSA executive pay continue to evolve with an eye on global best practices, while remaining responsive to local market forces and government influence.
Accurate salary benchmarking underpins fair and competitive compensation structures. Both UAE and KSA employers are increasingly data-driven in comparing pay rates – not only with each other, but also with global markets, as talent becomes more mobile. Recent insights highlight new methodologies, pay trends, and a heightened focus on pay equity in benchmarking exercises:
Compensation experts stress the importance of comprehensive, up-to-date market data for benchmarking. Korn Ferry, for example, gathers compensation data from over 26,000 companies across 150+ countries, providing a reliable basis for market comparisons. The latest tools include dynamic dashboards and AI analytics to identify trends by industry and role, making benchmarking more precise. By tapping into such vast data sources, Tuscan Consulting ensures that our clients’ salary structures are aligned with current market rates for each job level and function. In practice, this means regularly participating in major GCC salary surveys and using advanced analytics to pinpoint the right pay range needed to attract talent without overpaying. Benchmarks in 2025 are not static – companies are advised to review them at least annually (if not more frequently for hot jobs) given the fast-changing market conditions in UAE and KSA. Tuscan’s own survey data showed that 29% of organizations gave off-cycle salary increases (outside the normal annual cycle) in the past year to adjust to market changes or to retain talent in critical positions. This agile approach to benchmarking – rather than one-size-fits-all annual increases – ensures pay stays market-driven and competitive.
After a decade of modest pay increases, global salary budgets have recently hit their highest levels in 20 years. Tight labor markets and inflation from 2021–2023 drove many organizations to grant larger raises to retain staff. In 2023, over 60% of organizations worldwide reviewed specific employee groups and granted additional adjustments for critical roles or high performers to correct pay gaps. We see a similar pattern in the Middle East: rather than across-the-board increments, many UAE and KSA employers are using targeted salary adjustments. For instance, if certain IT jobs saw market pay jump 15% due to demand, a company might give those incumbents a special mid-year raise even if others only got standard increases. This is evident in high-demand sectors – technology, finance, healthcare, energy, and government – each of which has unique drivers in each country:
• In UAE’s technology sector, aggressive digital transformation goals have pushed salaries up quickly. A software engineer in Dubai might have seen an annual pay jump 8-10% each of the last two years as e-commerce and fintech boomed. KSA’s tech sector is also heating up, with Riyadh’s aspiration to be a tech hub; top data scientists or AI specialists in KSA can command 20% higher pay than a year ago, and companies often counteroffer to prevent poaching.
• In financial services, both countries saw more modest salary growth in 2023 (some banks even scaled back bonuses due to global market conditions). However, 2025 projections show finance salaries rebounding moderately (~4% increases) as confidence returns. Notably, Saudi banks, flush with liquidity, are expanding and competing with global banks for talent, contributing to higher executive pay in KSA’s financial sector vs. UAE.
• Healthcare and life sciences have been priority sectors. UAE life sciences firms projected ~4.2% raises for 2025 (above average), reflecting talent needs in pharma and biotech. Saudi is investing heavily in healthcare infrastructure; experienced medical professionals and hospital executives in KSA are seeing above-average pay hikes (some roles 5-6%+ annually) to attract international expertise and manage new facilities.
• In energy, the traditional oil & gas sector provides very competitive pay in both countries but with slower growth (around 3–4% annual raises) as those salaries were already high. However, in renewable energy and green tech, both UAE and KSA are essentially in startup mode and willing to pay a premium for specialists (e.g. solar project engineers, carbon capture experts). Saudi’s push for solar and wind projects is driving double-digit salary offers for experienced project directors (given the scarcity of local expertise).
• The government and public sector in UAE tends to set its own pay scales with generous benefits, often outpacing private sector in entry-to-mid level pay for local nationals. These scales usually adjust annually for cost of living (often 0–5%). In KSA, as mentioned, there’s a newly introduced pay scale for certain public roles (like engineers) that includes annual allowances and increments, effectively raising compensation in those jobs. Government initiatives in Saudi (e.g. new regulatory bodies, tourism authority, etc.) are sometimes directly pulling talent from private companies by offering superior total compensation, which then forces those companies to review and adjust their pay to keep key people.
The table below provides a side-by-side salary increase trend for UAE and KSA over the last five years, plus 2025 projections, illustrating how pay dynamics have evolved in each market. These figures represent average annual base salary increase percentages (inclusive of merit and market adjustments, excluding promotions) for a broad sample of companies:
| Year | UAE – Average Salary Increase | KSA – Average Salary Increase |
|---|---|---|
| 2020 | 3.8% (est.) - Pandemic impact, many freezes | ~2.0% (est.) - Pandemic impact, wage freezes/cuts in some sectors |
| 2021 | ~3.0% (est.) – Recovery begins, cautious raises | ~4.0% (est.) – Oil rebound drives hiring, restoring raises |
| 2022 | 3.6% – Strong rebound, inflationary uptick | ~5.0% (est.) – Post-COVID surge, talent war in Vision 2030 projects |
| 2023 | ~4.0% (est.) – Tight labor market, higher budgets | ~4.0% (est.) – Continued growth, but half of firms held at 0% |
| 2024 | 4.5% – Economic confidence, non-oil boom | 4.0% – High pay levels prompt moderation |
| 2025 (Proj.) | 4.0% – Moderation with sustained talent demand | 2–4% – Divergent forecasts |
As the table shows, both countries saw a dip in 2020 due to the pandemic, followed by a strong recovery through 2022–2023. The UAE’s salary increase rates have seen a steady 3–4% range in recent years, peaking around 4.5% in 2024. KSA had slightly more volatility – estimated lower increases in 2020 (some companies even reduced expat allowances as a cost-cutting measure), then possibly higher average raises (4-5%) in the 2021–2022 boom when oil prices rose and Vision 2030 initiatives took off, and about 4% in 2023–2024. For 2025, UAE is broadly expected around 4%, whereas Saudi projections range from very low (2%) to moderate (4%), reflecting some uncertainty. It’s worth noting that salary levels in Saudi Arabia (for certain roles) are on average 10–15% higher than in the UAE for similar positions, due to the need to attract talent into the Kingdom’s rapidly developing market. That means even a smaller percentage increase in KSA can equal or exceed the absolute dirham amount of a larger UAE increase. For example, the average CEO in Dubai earns about AED 78,800 in monthly base salary, while the average CEO in Saudi earns about SAR 88,250 per month; a 4% raise would add roughly AED 3,100 per month in the UAE vs. SAR 3,550 in KSA. Thus, salary benchmarking between UAE and KSA requires looking at both percentage movement and absolute pay levels. Tuscan Consulting advises clients with operations in both markets to calibrate their pay scales accordingly – often setting KSA ranges slightly above UAE for comparable roles, especially in sectors where KSA demand is outpacing supply.
Within this overall landscape, certain roles and industries stand out for unusual compensation trends. According to our Salary Guide 2025, technology and finance sectors in UAE and KSA are seeing unprecedented salary growth due to high talent demand:
• Technology and Digital Roles: These remain red-hot. In both countries, software engineers, data scientists, AI/ML specialists, and cybersecurity experts are seeing outsized salary growth. Mercer’s surveys indicate that tech roles got some of the highest adjustments in 2023–24. Tuscan’s data shows 36% of firms pay skill premiums for IT and digital skills. For example, a senior data analyst in Riyadh might earn 20–30% more in 2025 than in 2022 due to relentless poaching in the market. In the UAE, competition from crypto/blockchain startups and global tech firms (setting up regional hubs in Dubai) has driven salaries for programmers and cloud architects sharply upward, forcing local employers to keep pace.
• Financial Services: As noted, a bit more conservative, but wealth management and fintech roles are an exception – these are in high demand (with many new digital banks and crypto firms in UAE, and Saudi launching fintech sandboxes). A blockchain compliance officer or fintech product manager can command a premium as such talent is scarce. Also, in Saudi, as more global banks and PE firms set up in Riyadh, they often bring New York/London pay scales, which will eventually uplift the market range for similar roles in the Kingdom.
• Healthcare: Specialized doctors, healthcare management, and biotech researchers are increasingly valuable. The UAE has several new hospitals and research centers (especially in Abu Dhabi’s medical hub) and Saudi is opening medical cities. To attract top medical talent, total compensation packages (including bonuses, housing, education allowance for doctors’ families, etc.) have climbed. For instance, an experienced hospital administrator in KSA might now receive a retention bonus or LTI – historically unheard of in that sector – because new competitors are trying to recruit them.
• Energy Sector Engineers: A unique trend in Saudi Arabia – green energy project managers are seeing double-digit pay growth. With the push for solar and wind farms under Vision 2030, companies are raiding talent from abroad, offering expatriate-level salaries (which are high in absolute terms). Meanwhile, traditional oil & gas engineers remain highly paid but with modest growth in compensation (as their supply demand is more balanced). In the UAE, ADNOC and other energy firms are focusing on hydrogen and carbon capture, offering special assignment bonuses for engineers who take on these pioneering projects.
• Public Sector and Government Jobs: Governments themselves are influencing market rates. UAE public sector tends to pay competitive salaries (especially to UAE nationals) with steady increments. In Saudi, as mentioned, the government approved a new salary structure for engineers and is likely to review other professions too. Additionally, sectors like defense, aerospace, and aviation (often quasi-governmental in KSA) are likely to see about a 5% pay hike in 2025, above the national average – due to strategic importance and budget allocation. These roles often come with unique benefits (e.g. housing provided, or a car, etc.), which private firms then mimic to attract those with government experience.
• Emerging Industries: Tourism, entertainment, and mega-project development are areas where Saudi is particularly seeing new compensation benchmarks. Entities like the Red Sea Development Co. or Qiddiya (entertainment city) are hiring internationally, sometimes paying more than traditional sectors to bring in expertise. For example, theme park executives or hospitality managers recruited to these Giga projects might get pay packages 20% above what they’d get in Dubai, because these projects are high priority nationally. As these sectors stabilize, they will establish new benchmark ranges for roles that never existed in the country before. The UAE, having a more mature tourism sector, is more stable on those fronts, though the introduction of casinos (in Ras Al Khaimah) and other new entertainment ventures may spur some pay increases in niche areas.
A critical part of benchmarking in GCC countries involves allowances and benefits, not just base salary. It’s common to compare offers in terms of total cash (base + fixed allowances). Tuscan’s survey revealed that most companies structure pay with roughly 60–70% of cash compensation as base salary and 30–40% as allowances. The most common allowances in UAE and KSA include housing, transport, and mobile phone allowances (Tuscan data shows ~95% of firms provide a housing allowance, ~82% transport, ~77% mobile phone). Many also offer education allowances for children (about 50% of firms) and, for senior expats, annual air tickets home (about 68% of firms provide airfare benefit). These allowances are a significant part of benchmarking – for instance, a Saudi offer might have a slightly lower base salary than a UAE offer but compensate with a higher housing allowance (especially given Riyadh rents have risen). In 2024, with cost of living rising, companies revisited their allowance scales, and indeed Tuscan’s survey found several companies increased their housing or medical benefits (around 20% of surveyed companies enhanced housing or medical insurance benefits in 2024). The trend is a shift toward a “total rewards” mindset – employers are benchmarking not just salary, but the entire package (bonuses, benefits, perks). For example, Company A might match Company B’s base salary offer, but if Company B offers school fee coverage for expatriate children and Company A doesn’t, that could be a deciding factor for talent. As such, the benchmarking landscape in 2025 requires a holistic view. Tuscan Consulting helps clients evaluate total remuneration – ensuring that allowances (housing, transport, education), bonuses, and benefits are all factored in when comparing to market medians. This ensures apple-to-apple comparisons, especially between UAE and KSA where benefits practices can differ (e.g., KSA companies often provide furnished accommodation or a higher housing allowance). The result is more informed compensation decisions that reflect the true market value of roles in each location.
Salary benchmarking now also encompasses internal comparisons to ensure equity. Companies are not only looking outward at market data but turning inward to fix unjustified pay disparities across gender, nationality, or other groups. This is a rising priority in the Middle East. A recent Korn Ferry survey noted that 12% of global companies have implemented a formal pay transparency strategy, 15% have guiding principles, and another 29% are actively reviewing their policies – meaning well over half of organizations are working toward greater transparency about pay. In the UAE and KSA, there is no legal mandate yet to publish pay gaps or ranges, but multinational companies and progressive local firms are starting to adopt these practices voluntarily. According to Tuscan’s 2024 survey, ensuring fair and equitable treatment in rewards was one of the top retention measures cited by GCC employers – over a third of companies indicated they took steps in 2024 to address internal pay equity as a means to retain talent. Some have conducted internal pay audits or introduced standardized pay grades to eliminate ad-hoc disparities. For example, in government-linked companies in the UAE, there’s heightened attention to aligning expat and national pay for similar roles, to meet nationalization goals and avoid resentment. In Saudi, as more women join the workforce (female participation jumped in the last five years), forward-thinking companies are examining if any gender pay gaps exist and correcting them to build an inclusive reputation. In summary, market benchmarking in 2025 is as much about external competitiveness as it is about internal fairness – the best compensation strategies are blending both, using data to drive decisions that ensure employees feel valued relative to peers both in and outside the organization.
Inflation directly affects the real wage growth that employees experience. Even if nominal salaries are rising, high inflation can erode purchasing power, making pay raise feel insufficient. In 2022 and 2023, many economies worldwide saw inflation spikes, and while the Gulf countries had comparatively moderate inflation, it has still been a key factor in compensation planning for 2024–2025.
The UAE enjoyed relatively low inflation for much of the last decade, but it ticked up in 2021–2022. Consumer price inflation peaked around 4.7% in 2022 as global supply chain issues and a surge in demand post-COVID drove up prices (especially fuel and food). By 2023, inflation cooled substantially – estimates put UAE inflation around 1.6%–3.5% in 2023 (the variance depends on the measure; the UAE Central Bank reported 1.6% average, while Dubai’s CPI averaged ~3.3%). The key point is that 2023’s inflation was much lower than 2022’s, meaning that the salary increases given in late 2022 and 2023 (which were in the ~4-5% range) likely translated into some real wage growth for employees, reversing the slight real wage decline of the high-inflation 2022. Looking ahead, the Central Bank of the UAE projects inflation to remain moderate at about 2.3% in 2024 and 2.3% in 2025. This stability is crucial for planning: with average pay raises forecast around 4% in 2025, employees in the UAE could see real income gains of roughly 1.5–2% after inflation, on average. However, inflation impacts can vary: housing costs have been a notable pressure point – rents in Dubai and Abu Dhabi surged in 2023–24 (housing CPI was +6.5% YoY in April 2024). Employers have responded by boosting housing allowances and salaries particularly for junior to mid-level staff who are most sensitive to rent hikes. Food and fuel inflation have been less volatile recently (food inflation down to 2.3% by Q2 2024), so the cost-of-living increases are concentrated in housing and education. For UAE employees, real wage growth in 2025 will depend on whether their pay raise outpaces their personal inflation experience. Many expats feel the pinch of school fees and housing costs rising faster than general inflation. Indeed, a survey by Hoxton Capital found 95% of UAE expats felt financially better off in 2024 than a year ago, thanks in part to salary increases, but they remain concerned about cost of living and are prioritizing saving and investment. This indicates that while inflation is moderate, employees are acutely aware of it and expect employers to at least keep up with it in pay reviews.
Saudi Arabia has had one of the lowest inflation rates among G20 countries in recent times. As of January 2025, Saudi inflation was just 2.0% year-on-year. For context, Saudi inflation spiked in 2020–2021 (around 3-5%) largely due to the tripling of VAT in mid-2020 and some supply chain effects, but since 2022 it has steadied in the 1–3% range. The average inflation in 2024 was about 1.7%, and the Saudi Central Bank forecasts inflation to remain around 2% into 2025. However, like the UAE, Saudi Arabia has specific categories driving prices: housing costs rose significantly (housing, water, electricity, etc. jumped 8.8% in 2024), while other categories had minimal increases, yielding a low overall CPI. This means nationals and expats in Saudi who face rent increases might feel higher effective inflation than the headline 2%. For employers, the low headline inflation might justify smaller cost-of-living adjustments to salaries, which aligns with some firms planning only ~2% raises. Indeed, Cooper Fitch’s CEO noted people ask “why aren’t we seeing salary increases despite high inflation?”, pointing out that inflation and salary increase drivers differ – in Saudi’s case, despite the cost of living rising in some cities, companies feel salaries have already escalated in past years and may not automatically rise in step with current inflation. Consequently, real wage growth in KSA could be flat or even negative for some in 2025 if a company gives only a 2% raise and an employee’s personal inflation (rent, schooling, etc.) is 3–4%. On the other hand, many Saudi organizations are still giving 4%+ raises, which would outpace inflation comfortably, leading to real income gains. It’s a mixed picture: about half of companies didn’t raise pay in 2024, meaning those employees saw inflation erode their purchasing power slightly; the other half did raise pay, often above inflation, improving real wages. This divergence may widen inequality or satisfaction levels between employees of different firms or industries.
Globally, 2023 was challenging for real wages – the International Labour Organization noted that worldwide real wages fell by about 0.9% in 2022–2023, marking the first global real wage contraction since the financial crisis. In the GCC, fortunately, inflation never reached the extreme levels seen in Europe or parts of Asia, so the erosion was smaller. Nevertheless, employers are very mindful of real wage perceptions. If employees feel their raise was eaten up by inflation, retention suffers – especially when savings and remittances are important for expatriates. In the UAE and KSA, companies are adopting a few strategies:
• Cost-of-Living Adjustments (COLA): While not as formalized as in some Western companies, a number of firms gave ad-hoc COLA increases or allowances in 2022–2023 to offset inflation. For example, a Dubai-based employer might have given a one-time bonus or a mid-year increment when fuel prices spiked. Tuscan’s data shows around 20% of employers made off-cycle pay adjustments specifically citing increased living costs.
• Indexed Allowances: Some companies tie certain allowances (like cost of living or transport) to inflation indicators. In Saudi, a few organizations reinstated or increased the “Cost of Living Allowance” for employees when inflation climbed. As of 2025, inflation is low, so these allowances are not rising, but the mechanisms are in place should inflation accelerate again.
• Differentiating by Location: Within each country, inflation can vary by city (e.g., Riyadh vs Dammam, or Dubai vs Sharjah). Employers with staff across regions are starting to adjust pay or allowances regionally. For instance, companies in KSA may offer a higher housing allowance for Riyadh postings than for smaller cities to reflect rental cost differences. This ensures real wage parity across the workforce.
• Focus on Financial Wellness: Recognizing that inflation in essentials (like food, fuel) affects lower-income workers most, many employers have enhanced their benefits programs. Some introduced staff discounts, partnerships with supermarkets or gas stations, or increased meal allowances. Others, as seen in UAE, are packaging compensation with financial planning sessions or preferential banking benefits to help employees maximize their dirhams/riyals. The introduction of unemployment insurance in the UAE (a low-cost scheme that pays workers a portion of their salary for a few months if they lose jobs) also indirectly improves financial security, which employers highlight as part of the total reward offering.
• Real Wage Projections: Looking at 2025, if UAE inflation holds ~2.3% and KSA ~2.0%, and if actual salary increases turn out to be ~4% UAE and ~3% KSA (midpoint of forecasts), then real wages should inch upward in both markets on average. This is a much better scenario than many Western markets where inflation was outpacing salary raises until recently. It indicates that the Gulf’s proactive approach (raising salaries in response to 2021–22 inflation early) has paid off. However, employees in sectors that decide on minimal or zero raises (perhaps due to prior overcorrection or budget issues) will feel left behind. We advise companies to communicate clearly the rationale for their salary decisions in 2025. If giving below-inflation raises, explain the context (e.g., already high pay relative to market, or other investments in employee benefits) – otherwise, staff might perceive it as a pay cut in real terms and look elsewhere. Conversely, if granting healthy raises, tying it to performance and productivity can reinforce a meritocratic culture.
In summary, inflation in the UAE and KSA is currently manageable and relatively low, which is good news. It means compensation increases are more likely to result in genuine improvements in employees’ standard of living. Nonetheless, the cost of living (especially housing and other non-tradables) is rising in specific locales, requiring employers to stay vigilant. Real wage growth – even if modest – is crucial for morale. Both countries’ governments are also keen on keeping inflation low (Saudi’s inflation is among the lowest in G20, and the UAE is actively managing rent and fuel prices), so the macro environment should remain favorable for real income gains. For businesses, the key takeaway is to factor inflation-adjusted pay into their compensation strategy: use it as a baseline (ensure core salaries at least keep up with inflation over time) but then layer on merit increases, market adjustments, and promotions on top of that baseline to truly reward and retain talent.
Short-term and long-term incentive plans (STIs and LTIs) are being reimagined in 2025 to drive performance in today’s dynamic business environment. At the same time, there is growing emphasis on pay equity, transparency, and fairness as integral parts of a modern rewards program. Below we explore innovations in incentive design and the evolution of pay equity practices, with insights relevant to UAE and KSA employers.
The latest best practices in incentive plan design emphasize flexibility, alignment with strategic goals, and creative reward vehicles:
• Holistic Performance Metrics: Companies are broadening the metrics used in annual bonus (STI) and multi-year LTI plans beyond just financial targets. Inclusion of non-financial KPIs – such as customer satisfaction, innovation, and ESG outcomes – is increasingly common. WTW reports that globally the prevalence of ESG metrics in executive incentive plans has surged (76% of large US companies now include at least one ESG goal in their incentives, and an overwhelming 93% in Europe do). Notably, firms incorporate these metrics in a balanced way, often as part of a weighted scorecard of goals to avoid overemphasizing one area. The focus is on outcome-based metrics (e.g. measurable diversity targets or carbon reduction) where feasible, though many companies use qualitative assessments to retain flexibility. For UAE and KSA organizations, this global trend is filtering in: incentive plans might include milestones linked to Emiratization/Saudization, customer service excellence, or sustainability projects alongside revenue and profit targets. For example, a bank in the UAE could tie a portion of senior executives’ bonus to achieving a certain Emiratization ratio or community investment goal; similarly, a Saudi company could include a safety or environmental benchmark reflecting Vision 2030’s sustainability aims. By tying bonuses to what truly matters for long-term success (not just short-term profit), employers can reinforce the behaviors and values needed to thrive.
• Innovative Incentive Structures: Traditional annual bonuses and three-year vesting LTIPs are being supplemented with new reward mechanisms. Leading firms speak of “innovative incentives” coming to the forefront. For example, some companies are experimenting with project-based or milestone bonuses that pay out upon completion of key initiatives – this encourages agile innovation and cross-functional teamwork, as employees know they’ll be rewarded for achieving specific project goals. Others are granting spot bonuses and recognition awards (including small equity grants or cash awards) in real-time to celebrate exceptional contributions. A Korn Ferry “under the radar” trend for 2025 is the rise of CEO-delegated stock grants: boards give CEOs a pool of shares to allot at their discretion as immediate rewards for high-performing team members. This allows more nimble, concurrent rewards – “when successes are achieved in an agile environment, you want rewards to be more contemporaneous,” notes Korn Ferry’s Total Rewards leader. Such innovations create a more continuous feedback and reward loop, which is especially appealing to younger, fast-moving workforces in tech and digital sectors. In the UAE, we see tech startups using spot bonuses (e.g., giving a surprise long-weekend trip or cash award after a product launch) to keep talent motivated. In KSA, where many large projects have defined milestones (think construction or infrastructure), companies are aligning incentive payouts with those milestones – for instance, a bonus when a project phase is completed on time and budget, rather than waiting until year-end.
• Short-Term vs. Long-Term Balance: Achieving the right balance between short-term incentives (annual bonuses) and long-term incentives is a recurring challenge. Experts emphasize aligning STI and LTI plans so they complement each other and support the company’s strategy, rather than working at cross purposes. One emerging practice is to defer a portion of short-term bonuses into long-term plans, effectively requiring executives to retain some “skin in the game” for future performance. For example, instead of paying 100% of a bonus now, a company might pay 70% and roll 30% into a 2-year deferred award that only vests if certain longer-term goals are met. Another development is increased use of rolling multi-year incentive plans that overlap, to smooth out the impact of any single good or bad year. This encourages sustained performance and discourages gaming one year at the expense of the next. Additionally, discretionary adjustments are on the rise as a tool to fine-tune incentive payouts. WTW observed that over 60% of surveyed insurers applied managerial discretion at least once in the past 5 years to adjust bonus calculations (for instance, to account for an unforeseen pandemic impact or to reward extraordinary effort not captured by formulas). While this particular stat is from the insurance industry, it reflects a broader trend: companies want the ability to account for unforeseen events or qualitative factors that formulaic targets might miss. The key is to apply such discretion within a clear governance framework so adjustments are fair and consistent. In practice, in UAE/KSA this might mean Remuneration Committees reviewing not just the numbers but also leadership during a crisis (e.g., how management handled COVID or a cybersecurity incident) and then deciding if a bonus tweak is warranted. Effective incentive design in 2025 is more adaptive, striving to reward the right outcomes while avoiding unintended consequences (such as encouraging excessive risk-taking or discouraging collaboration).
• Emerging Reward Vehicles: Beyond cash and stock, firms are introducing incentive rewards tied to employee wellbeing and development. For instance, “sustainable rewards” is a theme WTW highlights– incentives that promote long-term employee wellbeing or growth. These could be bonuses for completing professional certifications, wellness program incentives (e.g., a $500 reward for meeting fitness goals), or extra paid time off for achieving project goals. The idea recognizes that not all motivation comes from cash alone. Particularly in the post-pandemic context, some companies offer retention bonuses paid in installments or “stay bonuses” that vest over a year or two, to retain key talent during critical business cycles. The use of personalized benefits as part of incentive packages is also growing. For example, high performers might earn points redeemable for exclusive learning opportunities, sabbaticals, or other bespoke perks. In the UAE, one multinational allowed top salespeople to choose a reward each year – options ranged from a luxury travel experience to tuition coverage for an executive education course. In Saudi Arabia, where work-life balance is an increasing concern for young professionals, some companies are offering an extra vacation week as a performance reward. Such inventive approaches to incentives can differentiate an employer in the talent market by showing they invest in employees’ personal growth and well-being, not just hitting numbers. Tuscan Consulting keeps a pulse on these innovations to help clients design incentive plans that are not only competitive but also aligned with employee values and evolving expectations.
• Incentive Plan Prevalence in the Region: It’s worth noting the current state of incentive plan adoption in UAE/KSA. According to Tuscan’s survey, 71% of organizations offer short-term incentives like annual bonuses or sales commissions, which means nearly 30% still have no formal STI – often smaller firms or public sector entities with fixed pay structures. For 2024, only about half of surveyed companies planned to actually pay out short-term incentives (some may have profit-linked pools that ended up not triggering) – reflecting caution in uncertain economic times. On the long-term incentive side, only 21% of organizations have LTI schemes (e.g., stock options, deferred profit sharing) in place, indicating that many companies in the region have room to modernize their executive rewards. However, this number is slowly rising as more local companies consider equity or phantom share plans to stay competitive. We expect by 2025–2026, LTI adoption will grow, especially in KSA where a wave of companies are listing on the stock exchange and can use actual equity grants. For now, companies without formal LTIs are using other retention tools (like multi-year cash bonuses or increased end-of-service benefits) to fill the gap.
Hand-in-hand with incentive redesign is a movement toward greater pay equity and transparency. Employers are recognizing that how they pay people – and whether it is seen as fair – has a huge impact on engagement and retention. Several trends are noteworthy:
• Pay Transparency Initiatives: Globally, there is momentum towards pay transparency – some jurisdictions now require job postings to include salary ranges, and companies are being more open internally about pay scales. While the UAE and KSA do not have laws mandating pay transparency, multinational companies operating in these markets often import their global practices. According to Korn Ferry research, about 12% of companies have implemented a pay transparency strategy and another ~44% are developing or considering one. In practical terms, this could mean employees are given information about the salary range of their grade, or what the median pay is for their role, or even broad communication about how annual increases and bonuses are decided. In the UAE, a few high-profile employers announced they would share internal pay quartile data by gender or role – for example, some multinationals in Dubai have published gender pay gap statistics internally to staffas part of their DE&I efforts. In Saudi Arabia, cultural norms around discussing pay are changing slowly; younger workers are more likely to share info amongst themselves via Glassdoor or social media. This pushes companies toward transparency. We advise companies in the region to proactively craft a pay transparency stance – it can be as simple as training managers how to discuss pay with their team honestly, or publishing compensation philosophies – to build trust. Organizations that embrace transparency carefully (explaining the “why” of pay decisions) often see improved employee satisfaction, even if they haven’t yet reached perfect equity.
• Gender Pay Gap and Diversity: Both UAE and Saudi Arabia have stated commitments to improving gender diversity in the workforce. The UAE has a law on equal pay for equal work for women and men (issued in 2018) and continues to encourage female representation. KSA, as part of Vision 2030, dramatically increased women’s workforce participation (from ~19% to ~36% in five years). With more women in diverse roles, ensuring no unjustified gender pay gaps is increasingly on the agenda. While official statistics on gender pay gap in these countries are scarce, anecdotal evidence and Tuscan’s consulting experience suggest gaps do exist in certain sectors/traditional companies. Evolving best practice is to conduct pay equity audits. In 2024, Tuscan Consulting helped several clients analyze pay to identify discrepancies. Many firms found that when controlling for job level and performance, the gaps were small, but the representation of women in higher-paying roles was low – pointing to a talent pipeline issue. As a result, some companies are setting targets to increase women in leadership (which over time will naturally help close pay gaps). There’s also a trend of standardizing compensation offers to reduce biases: for example, some firms stopped asking candidates about current salary (to avoid anchoring offers lower for those who historically earned less due to bias). Instead, they based pay on the role’s worth. We expect by 2025 more UAE/KSA listed companies will publicly commit to fair pay practices (possibly signing pledges or including statements in annual reports). Pay equity isn’t just a legal or moral issue; it’s seen as key to employer brand – especially among millennials and Gen Z employees who value fairness and will avoid companies with a reputation for pay discrimination.
• Local vs Expat Pay Gaps: A unique aspect in the Gulf is the historical pay differential between expatriates and local nationals, especially in government or semi-government sectors. In the past, expat packages were often higher in cash (to entice relocation) but locals had other advantages (pensions, more job security). Now, with localization policies, the gap is narrowing. UAE organizations, particularly government-related ones, are aligning pay grades so that a job has one range. Saudi companies are similarly ensuring that Saudi and non-Saudi employees at the same level receive comparable compensation (factoring in that expats don’t get the same retirement benefits). This is part of broader pay governance maturity. More boards and Remuneration Committees in the region are seeking independent data to ensure their pay practices are defensible and competitive. Tuscan often provides market benchmarking to these committees so they can make informed pay decisions. In 2025, with talent increasingly willing to move for better pay, having internal equity (everyone feels they are paid fairly relative to peers) is crucial to prevent disgruntlement. Pay transparency can support this by quelling rumors and letting data speak.
• Total Rewards Communication: Another emerging best practice is better communication of the total rewards package value. Companies might not be ready to disclose everyone’s salary, but they are being more transparent about how much they invest in each employee through benefits, incentives, and perks. For example, some firms send an annual “total compensation statement” to employees, which details base pay, bonus, allowances, benefits (with a monetary value, e.g. insurance premium of X, end-of-service accrual of Y), etc. If an employee sees that their total package is, say, AED 500,000 and not just the AED 350,000 base salary, they appreciate their compensation better. This can help employees understand that seemingly small perks or benefits actually add up, and it can improve retention. In Tuscan’s survey, we noted that companies having strong recognition and communication practices around rewards also reported better engagement. About 54% of respondents said they increased recognition awards (monetary or non-monetary) to retain talent – which ties into transparency, as recognizing contributions publicly and explaining rewards boosts the perception of fairness.
• Governance and Policy Updates: Companies are formalizing policies around pay decisions to ensure equity. Some have introduced clear guidelines on salary offers, promotions, and merit increases – reducing manager discretion that could lead to bias. Others have set up internal committees or HR audits to review out-of-cycle increases or high raises to ensure they are justified. On the incentive side, as noted earlier, many are ensuring ESG and compliance metrics are part of executive bonuses – which also speaks to fairness and long-term value creation versus short-term gain. Not to be overlooked, regulatory compliance is also a part of pay trends – for instance, wage protection systems in the UAE and KSA mandate timely payment of wages; this doesn’t directly increase pay, but it ensures employees actually receive what they’re owed on time, which is fundamental. The Saudi Ministry of Human Resources has been active in publishing labor regulations and ensuring companies adhere to contracts (e.g. not cutting pay without consent, etc.), which protects employees from unfair pay practices. All these create an environment where transparency and fairness are the expected norm.
In summary, incentive plans in 2025 are more complex and strategic than ever, moving beyond pure financial metrics and incorporating innovative structures to motivate talent in the short and long term. At the same time, pay equity and transparency are coming to the forefront – even in markets like UAE and KSA without explicit legal mandates, companies realize that being fair and open about pay is a competitive advantage in attracting and retaining talent. Tuscan Consulting is at the intersection of these trends – helping design incentive plans that drive the right behaviors while also conducting pay equity analyses and guiding organizations on communicating their rewards. By embracing both innovation in incentives and rigor in pay equity, businesses in the UAE and KSA can ensure their compensation models are not only competitive but also credible and trusted by their workforce.
Navigating compensation and benefits in 2025 requires a data-driven and people-centric approach. Based on the trends and insights discussed, here are key takeaways and action points for businesses in the UAE and KSA looking to refine their compensation strategies:
1. Stay Market-Aligned with Regular Benchmarking: Both UAE and KSA markets are evolving quickly. Leverage up-to-date salary benchmarking data to ensure your pay ranges reflect current market rates. Consider side-by-side comparisons for UAE vs. KSA if you operate in both, as pay levels can differ significantly (KSA often higher for certain high skill expat roles). Adjust salaries proactively, especially for high-demand roles, to avoid losing talent to competitors. Participating in reliable compensation surveys should be an annual exercise under evolving market conditions.
2. Budget for Moderate Raises – and Be Strategic: Plan for roughly 4% salary increase budgets in the UAE and ~3–4% in KSA for 2025 but allocate those increases strategically. Don’t just give everyone the same raise – use targeted adjustments to reward top performers, critical skills, and to fix internal inequities. If inflation remains ~2%, these raises will keep employees ahead in real terms, which is crucial for morale. However, if your industry is booming (tech, green energy, etc.), be prepared to grant above-average increases or bonuses (>5-10%) to retain key talent, as others will surely do so.
3. Modernize Incentive Plans: Re-evaluate your short-term and long-term incentive programs. Incorporate a mix of financial and strategic metrics (including ESG, customer, or innovation KPIs) to drive well-rounded performance. Explore innovative incentive tools like project bonuses, spot awards, or deferred bonus schemes to keep employees motivated year-round. Importantly, ensure your total pay mix (base vs. bonus vs. LTI) is aligned with market norms – for senior roles, consider increasing the at-risk portion tied to performance. If you don’t have a long-term incentive plan and face senior talent retention issues, 2025 is a good time to design one (even a simple deferred cash or phantom equity plan can make a difference).
4. Address Pay Equity and Transparency: Conduct a pay equity audit to identify any unwarranted gaps between employees (gender, nationality or otherwise). If gaps exist, create a plan to close them over time (through adjustments or as part of annual raises). Develop a clear compensation philosophy and educate your managers so they can communicate it. Consider sharing more information with employees about how pay decisions are made, and even ranges for roles, to build trust. Given that fairness is a top concern (Tuscan’s data shows many exits are due to “inadequate compensation” or perceived external inequity), being proactive on this front will aid retention.
5. Leverage Total Rewards (Not Just Salary): Remember that compensation is more than base pay. Use your benefits and perquisites budget to add value in ways that matter. For example, review and adjust allowances for housing, transport, or education to remain competitive, especially as living costs change. Review benefits like health insurance, wellness programs, and flexible work options – these improve your employee value proposition. In KSA, highlighting family-friendly policies (since quality-of-life improvements are underway) can attract expatriates and locals alike. Ensure you communicate the full value of these benefits to employees. A well-structured total rewards package, when communicated properly, can often trump a higher salary offer with poor benefits.
6. Consider Differentiated Rewards for High-Demand Skills: In areas like digital, AI, cybersecurity, and engineering, talent is scarce. It may be necessary to implement premium pay scales or special incentives for these roles. Some companies create separate “hot jobs” allowances or retention bonus pools for critical skills. According to our findings, about one-third of companies have started doing this. If hiring or turnover data shows certain roles are hard to fill/keep, don’t hesitate to invest extra in them – the cost of vacancy or replacement is likely higher.
7. Governance and Expert Advice: Ensure your compensation governance is solid. Use Remuneration Committees for oversight on executive pay and get expert advice to remain aligned with regional and international standards. Engaging compensation consultants can provide an external perspective and data to validate your strategies. This is especially important in family businesses or fast-growing companies in UAE/KSA that may not have established compensation structures – a consultant can help design grading systems, salary structures, and incentive plans tailored to your business strategy and compliant with local norms.
8. Monitor Economic Indicators: Keep an eye on inflation, unemployment, and economic growth as 2025 progresses. The Gulf economies can be influenced by oil price swings and global events, which in turn affect labour markets. If inflation suddenly ticks up beyond forecasts or if growth accelerates, be ready to revisit your compensation plans mid-year. Conversely, if a downturn occurs, have a contingency for smart cost management (e.g., focusing on variable pay rather than cutting jobs). The agility you show in adjusting pay will be noticed by employees – it can either reinforce trust or erode it, depending on how you handle changes. Strive for consistency and fairness, even in tough times.
By integrating these takeaways from our UAE and Saudi Arabia Salary Guide 2025, organizations can develop compensation and benefits programs that are competitive, equitable, and aligned with business goals. 2025 promises to be a year of continued growth and competition for talent in the Gulf – those companies that proactively adapt to trends and prioritize their people through smart rewards strategies will position themselves as employers of choice. Tuscan Consulting supports employers in the UAE, KSA and GCC in this journey, combining deep local expertise with global best practices to ensure your rewards strategy drives performance and loyalty in equal measure.
