Salary growth in the UAE is projected to ease to 1.6% in 2026 as heightened competition and population inflows outpace job creation, according to Cooper Fitch’s Salary Guide UAE 2026 report. The projection is based on responses from more than 1k organizations representing nearly 1 mn employees.

This marks a “long-term normalization” of the UAE’s salary cycle, CEO Trefor Murphy told EnterpriseAM UAE, noting that the country already sits “at the high end of global salary payments, in the top 75th percentile, even before adjusting for taxes.”

This has been happening for a while: Earlier this year, recruiters said that Dubai’s popularity was driving salary stagnation, with job postings drawing over 2k applicants and employers finding less of a need to offer generous perks to draw talent.

Recalibrating starting salaries: As the labor pool expands, firms are increasingly differentiating between UAE-experienced and new-to-market talent. The guide finds 15% of employers expect to offer lower salary ranges for new joiners in 2026, while most plan modest 0-5% increases. “The starting salary for a non-GCC or non-UAE-experienced person is going to be a little lower than someone with experience locally,” Murphy said.

Could actual increases come in higher? This year offers a precedent: Employers projected 0% weighted-average growth for 2025 but ultimately delivered 2.6%. Murphy said the same dynamic could play out in 2026, with actual increases landing “closer to 4%” if firms adjust mid-year to retain key performers.

Bonuses are also picking up the slack: Companies remained conservative on fixed pay this year and leaned more on performance-driven bonuses — a trend Murphy expects to continue through 2026. With base-salary growth muted, bonuses have become a key lever to retain high performers.

Specialists see the strongest gains: Although headline growth is moderate, specialist roles stand out. The guide shows that 14% of individual contributors are set to receive 6-9% increases, nearly triple the size of leadership-level increases. Murphy said these senior engineers, architects, and finance specialists are “catching up” after being overlooked for raises in recent years. “They don’t manage a team, but they’re instrumental to an organization working well,” he added.

More increases for Emiratis? Firms are increasingly competing for UAE national talent, and in some cases will need to flex salaries upward to attract or retain nationals in specialist and mid-senior roles, he added.

Will any of this weaken the UAE’s appeal for global talent? Murphy doesn’t think so. Comparable global cities — London, Paris, Frankfurt — face higher taxes and similar cost bases, allowing Dubai to remain competitive even with modest pay adjustments, Murphy explained. The challenge, he said, is more pronounced for movers from markets where costs of living are lower as opposed to global peers.

Softening salaries has not affected hiring growth so far, with the UAE maintaining its regional lead in 3Q 2025, posting 3% q-o-q employment growth — the fastest in the GCC — supported by real estate, aviation, and tourism, according to the Cooper Fitch Gulf Employment Index (pdf). Recruitment centered on operational and leadership roles.

The salary guide reinforces this picture: Real estate and construction are set to remain the UAE’s biggest non-oil growth drivers into 2026, supported by multi-year pipelines and strong investor demand. Public-sector hiring is also accelerating, with nearly half of entities expecting double-digit headcount growth next year. Aviation, defense, and aerospace show similar momentum.

Murphy pointed to clear structural drivers; record government spending, new airports and metro extensions, and surging visitor numbers, with Dubai on track for 120 mn tourists. Population inflows of 200-300k people annually are adding sustained demand across housing, education, healthcare, and financial services, creating hiring needs across the ecosystem.

ICYMI- Hiring in the UAE also rose 4% in 2Q — the strongest in the region — driven by real estate, financial services, tech, and high-net-worth inflows. This followed a slower 1.25% increase in 1Q.

Talent supply is strong in the middle, tight at the top: Cooper Fitch’s guide shows 67% of employers believe the UAE has sufficient talent to meet hiring needs. That optimism drops sharply at senior levels: 40% of executives say the market cannot supply the leadership and transformation capabilities they require.

Shortages are role-specific rather than sector-wide, concentrated in digital transformation, strategy, and mega-project delivery. Skills in these areas evolve “month to month,” Murphy said, and new large-scale projects — including airport expansions — are creating demand for capabilities not yet available locally.

Across the GCC, hiring grew 1.3% in 3Q, as firms continued to prioritize revenue-generating, delivery-focused, and digital-transformation roles, while limiting non-essential headcount due to slower project pipelines and cost pressures. Employers maintained optimism in non-oil sectors but tied hiring approvals more tightly to performance and budget discipline.

Regional breakdown: Saudi Arabia posted 1.5% hiring growth as major projects advanced. Hiring growth from Qatar and Oman remained broadly flat, while Kuwait and Bahrain saw dips of 1-2%.

Across the GCC, hiring was strongest in the senior finance sector (+8%), driven by demand for FP&A and treasury talent, while investments (+4%) rose as firms strengthened governance and fund-operations capacity. Real estate (+7%) saw continued momentum as major masterplans advanced into delivery stages, and public sector hiring (+5%) was supported by ongoing digitalization and infrastructure programs.

Tech-related roles remained resilient, with software and digital/data/AI up 4%, while cloud added 3% and cybersecurity dipped 1% as firms focused on upskilling. Meanwhile, banking fell 2% as UAE lenders advanced merger integrations and internalized key functions.

Looking ahead, hiring remains polarized: Some 48% of UAE firms plan to add headcount, while nearly a third plan reductions, according to the salary guide.

This split comes as regional labor demand increasingly hinges on project delivery cycles, particularly in real estate, where developers keep lean teams and employment expands or contracts based on which projects move into active construction, Murphy explained. Delays or faster-than-expected handovers can shift hiring needs significantly from quarter to quarter.

Regionally, hiring is expected to remain steady into 2026, led by real estate, finance, aviation, and digital-led industries. Approvals will continue to be tied to project delivery, budget discipline, and measurable business value.

Pay-wise, Murphy said salary growth is unlikely to accelerate without easing labor oversupply, with employers expected to continue favoring lower-cost new entrants and adopting more selective hiring strategies throughout 2026.

Tags: