Business leaders in the Middle East, including the UAE, have reported a rise in employee turnover after delaying salary hikes for professionals and white-collar employees, a new report reveals.
The Robert Walters Middle East Salary Survey 2025 found that 68 per cent of respondents acknowledged higher attrition rates as a direct result of delaying pay hikes, a signal that efforts to cut costs are taking a toll on workforce stability.
With a shifting economic landscape, many companies are making tough financial decisions to manage overheads. One common response has been to defer or scale back salary reviews. While this may help balance short-term budgets, the long-term consequences are becoming apparent.
According to the survey, 32 per cent of business leaders said that holding off on pay rises has also resulted in a notable rise in employee disengagement. This disconnect can snowball into broader morale issues, reduced productivity, and an erosion of company culture.
“Businesses are under immense pressure to keep costs down, and for many, salary increases just haven’t been feasible this year. In fact, 77 per cent of business leaders said budget constraints and business performance were the top reasons for delaying or reducing pay rises,” says Jason Grundy, managing director at Robert Walters. “Our research shows that these decisions, while understandable, are not without consequence. Whether it’s higher turnover or a gradual drop in motivation, companies are starting to feel the effects.”
Beyond internal metrics, the findings suggest a growing misalignment between employer actions and employee expectations, especially as the job market becomes more accessible and competitive.
“There’s a clear message here — even if employees understand the business pressures, unmet expectations are still pushing them to reconsider their options. And with AI tools streamlining the job application process, employees have more opportunities than ever to explore new roles,” adds Grundy.
“This is where salary benchmarking and market insights become so important. Workers who haven’t seen a pay rise may be planning to discuss salary in their mid-year reviews, and employers will need market data to communicate credibly, demonstrate fairness, and manage expectations.”
Remuneration not only factor
However, remuneration isn’t the only lever available to retain talent. Experts recommend that employers focus on alternative forms of value that resonate with modern professionals.
Aws Ismail, general manager at Marc Ellis, Dubai, said, “We’ve seen companies manage this well by focusing on non-monetary incentives; things like flexible work setups, growth plans, internal mobility, and clear recognition. But these can’t just be temporary patches, they need to be part of a genuine culture that values people beyond just pay.”
“We believe that the reality is, in a fast-moving market like the UAE, employees have options and when compensation doesn’t reflect their contributions or the cost of living, they start looking elsewhere. However, I also believe that it should not always be about the money, it’s about feeling recognised, valued and part of a family,” he said.
Transparency and communication
Experts emphasised that transparency and communication play a vital role in how employees respond to delayed raises. When financial limitations exist, clear messaging around the reasons, future outlook, and individual value can help retain trust.
Ismail added, “From the employer’s side, we understand that budgets can be tight, and raises aren’t always possible right away. Employers will always reward those employees who they are dependent on, those who are adding real value and their inputs are helping the business in one way or another.
“When there are issues with budgets and cashflow, we believe communication becomes critical. Employees should understand the reasons behind the delay of a pay rise, what the roadmap looks like, and how their performance is being acknowledged in the meantime. Silence or vague feedback from employers only leads to frustration and a downturn in efforts and productivity.”
A consistent theme across expert insights is that recognition, growth pathways, and open dialogue can make a tangible difference when immediate financial rewards aren’t feasible.
“Employees don’t disengage solely because of pay increase delays — they disengage when there’s a lack of communication or perceived appreciation. Addressing this through ongoing dialogue and offering a clear timeline or performance-related benchmarks can go a long way in maintaining trust,” said Nickie Wilson, executive director of Genie Recruitment.
“Open, honest conversations are critical. One effective tactic is to implement goal-linked salary conversations, so employees know what they are working toward and don’t make their own assumptions. This can prevent resentment quietly building.”
Source – https://www.khaleejtimes.com/jobs/uae-delayed-salary-hike-driving-employee-turnover