The HR Consulting firm Mercer has released the results of its latest survey and the story has been reported in Emirates Business 24-7 and Arabian Business, amongst others. Mercer surveyed “more than 100 firms” and the headline figures were as follows:

The Total Remuneration Survey (UAE) of more than 100 firms with close to 23,000 employees said base salaries will increase by between 7 and 7.5 percent in 2010.

The survey findings also highlight the unpredictability of the past 12 months. In mid-2008, firms were forecasting 2009 salaries of close to 10%. Yet in fact, firms reported that base pay across the UAE rose by an average 3.4% – 5.2% during the year.

The reader comments on Arabian Business are very critical of the survey and its results. To be fair though, Mercer can only base their reports on the information they receive from companies and they are honest about the fact that company expectations last year did not prove to be an accurate guide.

My initial reaction is that the 3.4% – 5.2% increase for 2009 is certainly not realistic for Dubai, although salaries in Abu Dhabi have held up much better. As for the 2010 prediction, it’s really very hard to assess, but our estimation would be stabilisation and some calm after the storm.

Emirates Business 24-7 very kindly quoted me today in an article regarding the difficult process of salary realignment in the UAE.  The events of the last 12 months have certainly posed a lot of challenges for businesses as they sought to adapt to the sudden and dramatic shift in the labour market and the business environment more generally. Looking back at the last quarter of 2008, it is incredible to consider just how rapidly concerns shifted from talent shortage and wage inflation to the issues of cost control and redundancies. The good news is that the process of cost and wage realignment, difficult as it has been, seems to be settling into a new equilibrium.