UAE Salaries on a Decline: The Influx of Competitive Expatriates

With the rapid urbanization, industrialization, and advancement in technology in UAE cities such as Dubai and Abu Dhabi, the city of wonders - Dubai witnessed a rapid influx in population of about 5% from all over the world back in 2014-2015. The increasing real estate ventures in Dubai between 2015 and 2016 led to a 78% rise in the population caused by the increasing demand for foreign workers to provide support in the construction work.

The numbers kept on rising with each passing year until 2020, when the entire world suddenly fell into a global pandemic—Covid-19, leading to a huge decline in the population growth to about 1.6% from 5% just the previous year, causing a great level of harm to the real estate as well as the corporate spheres of Dubai. With the entry of the pandemic, Dubai also faced an imbalance in its economic growth and GDP, as it was witnessed in the case of most of the countries all over the world.

In 2021, the country stepped into the recovery mode to revive from the damage caused by the pandemic and pull its economy, growth, and development back into action. However, there is an important point to be noted: that despite the arrival of the global pandemic, the country on an average experienced a 54% overall growth in its population from 2013-2021, out of which 50% was male population and 65% was female population, which shows the country’s diligence and determination to pull through despite sometimes being stuck in dire situations.

1. When there is an oversupply in the market, there is always going to be a flattening of salaries that puts employers in a more dominant position in terms of how they pay bonuses, how they look at salary increases, or how they hire new people into their businesses.
2. The legacy expats have been on high salaries, great bonuses, and living allowances, and private school fees for their children are in danger.
3. For people coming into the market since Covid-19, the allowances side of an expat package has certainly dissipated completely. So the additional things that a person doesn't get paid anywhere else in the world but in Dubai has certainly been on a decline since around 2017 and 2018, but since Covid has been eliminated from expat packages, and does not seem that will be back things may get a bit better.
4. The idea that maybe 20 years ago Dubai was a hardship post for people might have been somewhat acceptable, but now describing Dubai as a hardship post has gone completely, and it is probably not coming back.
5. A lot of jobseekers are coming to Dubai with no work, thinking it is like moving cities back home, sometimes with their families but most of the time without them. This is creating a level of desperation on their side to get something, and they are willing to do whatever it takes to get that first start with an organization. This is undoubtedly causing that kind of flattening in salaries because employers are taking that to their advantage and looking to take someone in for below what they would generally have to pay in this market for them.

From the above reasons, we can understand that in the current situation, when there is an uncontrolled excess rush of expatriates to Dubai from all around the world, it is bound to create circumstances leading to decline in the expatriate salary packages from what they used to be in the past. This is creating unfavorable and unpredictable conditions for the people migrating from their home countries to Dubai in search of better living and opportunities for themselves and their families.

Moreover, the increasing number of expatriates is also leading to rising competition in the corporate domain, thereby significantly bringing down salaries and benefits offered to the expats. This situation is like an eye opener for the expatriates, forcing them to think cautiously before taking any decisions in the future.