UAE hiring contracts for the first time in four years as firms recruit to the final stage, then pause on uncertainty

Hiring in the UAE contracted for the first quarter in more than four years. Cooper Fitch's 2Q 2026 Gulf Employment Index, seen by EnterpriseAM, puts UAE hiring activity down 4% q-o-q in 2Q, the sharpest fall in staffing levels since August 2020. But the behavior behind this figure is much more nuanced: Companies are running searches to the very end and then not hiring anyone.

“They are recruiting right up until the final stage, but not making the final hire,” Cooper Fitch CEO Trefor Murphy tells EnterpriseAM. He describes a holding pattern that has now dragged on for months. Initially, the thinking was that this trend would come to and end in June, which then became July, and is now more open-ended.

What’s behind this pattern? The cause, Murphy tells us, is less any single shock than the stop-start rhythm of the US-Iran war. “Nothing kills confidence like uncertainty,” he says. “We went from a military conflict to an MoU on a peace process, and then [the strait] was blocked, unblocked, blocked, and unblocked,” Murphy explains, adding that the stop-start cycle is worse than a continuous conflict where the expectations are clear. “When it is stop-and-start, it is really difficult,” says.

The regional hiring picture is uneven, and it tracks exposure to those disrupted trade routes. GCC hiring fell 3% overall in 2Q, with Qatar down 6% on its reliance on energy exports and Gulf shipping, Kuwait and the UAE down 4%, and Bahrain down 2%. Only Saudi Arabia and Oman grew, each up 1%, largely due to Hormuz bypass capacity. The UAE’s June PMI fell to 50.8, its weakest reading in more than five years, and the central bank raised its 2026 inflation forecast to 2.3% on supply pressures tied to the regional situation.

Beyond the headline figure, hiring didn’t stop so much as narrow to what firms could not do without. Companies funded roles tied to active delivery, revenue protection, financial control, regulatory requirements, and operational continuity, while broader expansion became harder to justify. Hiring in finance grew 5% and investment management 6% on the back of ADGM and DIFC fund activity, while hiring in the mining industry grew 5% on Saudi exploration licensing, all defensible, delivery-linked activity.

The elephant in the room: AI

One line in the data cuts against the gloom: Hiring for data-and-AI-related jobs grew 4%, even as hiring for software positions fell 6% and cloud jobs dipped 4%.

One take is that AI is bucking the downturn, but Murphy isn’t sold. “AI is being oversold to us by big tech, much like they oversold cyber, data, security, and consulting services throughout my career,” he says. “Our 4% growth figure might just be a recovery from a quiet 1Q” or just a reflection of the harsh market reality: AI is a tool firms are reaching for because of the freeze — a way to hold or cut headcount while keeping the work going.

Others say the AI momentum is real in places like the UAE and precedes the overall market slowdown: “The UAE’s AI momentum reflects a deliberate effort to embed AI across the economy, not just within the technology sector,” Bivek Sharma, chief technology and AI officer at PwC Middle East, tells us, with the pull now for talent “that can apply AI in operations, services and decision-making.” According to PwC’s 2026 Global AI Jobs Barometer, the share of UAE postings requiring AI skills tripled, from 1.0% in 2021 to 3.2% in 2025.

PwC’s figures come with a few caveats: The Barometer covers the period between 2021 and 2025, so it stops before the market turned. It describes the years the UAE was still adding jobs, not the 2Q 2026 freeze. And even within PwC's own data, that rising share sits on a shrinking base: total postings fell across every level of AI-exposed jobs between 2024 and 2025, with the most AI-exposed occupations shedding the most. A bigger slice of a smaller market can signal structural change as easily as growth.

BACKGROUND- Cooper Fitch’s index tracks new job opportunities across the GCC using its own placement data. It measures what firms are actually recruiting for right now — which is why it caught the 2Q freeze that broader adoption surveys, built on job-ad counts or annual data, would miss. PwC’s barometer, meanwhile, looks at postings, regardless of whether they end up filled or not.

What next?

The impact of AI is now genuinely felt in how many UAE firms approach new hires — and this looks like cutting jobs, on one end. For a wealth management platform like Abu Dhabi-domiciled Sarwa, there’s a basic test for any new hire or contract: “It’s become less of, ‘Do we need this or not?’ and more of, ‘Can this be done by AI or not?’” Mark Chahwan, co-founder and CEO, tells EnterpriseAM.

Sarwa used an AI model for a recent Arabic-language website audit — not so long ago, that would once have gone to an agency. “AI is going to drive down costs” for some tasks, he says. “This is the kind of task that, instead of taking a few weeks, can now be done in an hour,” he adds.

Upskilling teams will be critical to many companies as AI skills become a requirement, regardless of position. Chahwan tells us that Sarwa’s chatbots now handle roughly half of inbound queries, with the firm deliberately keeping and expanding human support alongside them. Where Sarwa hires, it has stopped treating AI as a category of its own. “One of my really close friends, an engineer at Sarwa, started to say, ‘I haven’t written a line of code in so long,’ because it just became like a co-pilot,” Chahwan says. “The terms ‘AI engineer’ or ‘AI roles’ will probably disappear as it gets embedded in all jobs.”

“The biggest opportunity is not just hiring a handful of expensive AI specialists, but equipping the wider workforce with AI skills,” PwC’s Sharma says. “Organisations that combine targeted specialist hiring with large-scale upskilling will be best positioned to capture long-term value” — which is essentially what Sarwa’s Chahwan is saying about AI literacy becoming “part of all roles.”

And while this upskilling push will cut into the premiums some have been paying for general AI skills, execs in high-level positions with stand-out AI skills will likely have a window in which they can command higher salaries — for a little while longer, at least. PwC puts the AI wage premium in UAE financial services at 92%, against a 16.8% global average. Asked about hiring competition and premiums, Sarwa’s Chahwan says: “It’s more from the seniority, I would say, than just the fact that it’s AI. Because it’s so important to the C-suite and strategy, generally, the pay will come for someone who can have influence, steer people, and has the technical know-how.”

What to watch for in hiring — short- and long-term: In the near future, it’s about a ceasefire, not technology. “It is very hard to see hiring momentum returning without a permanent ceasefire,” Murphy says. His base case is a slow recovery, with a flat 3Q and a better 1Q next year. And as the recovery materializes, long-term tells is whether we see structural changes in the market, like AI offerings continuing to grow, all the while the larger job market offerings are shrinking.