Thousands of expat workers in the United Arab Emirates are likely to see an increase in housing allowances later this year.
Almost a quarter of expats in Abu Dhabi and a third in Dubai will enjoy a hike in the benefit, according to a new study published by human resources firm Mercer.
Researchers asked 147 companies in both states about their intentions for paying expat housing allowances this year.
Almost 35% of companies in Abu Dhabi and 41% in Dubai pledged they will increase housing allowances in the coming months.
Most of the firms in Abu Dhabi expected nine out of 10 expats would gain from the increased payment, while those in Dubai reckon around 82% of their workers would receive the extra benefit.
Recruiting and retain talent
“The companies are not doing this out of the goodness of their hearts but in response to rising rents, especially in Dubai,” said a spokesman for Mercer.
“Rents in Abu Dhabi are more stable, so companies there are under less pressure to pay extra benefits.
“But rents in Dubai have been increasing at up to 30% a year and housing allowances will take a while to catch up.”
Last year, 15% of companies in Abu Dhabi and 25% in Dubai offered higher housing allowances last year.
“Companies in the UAE are finding problems in recruiting and retaining talent because living costs in Dubai and Abu Dhabi are rising so high,” said the spokesman.
“More of the same is expected as World Expo 2020 is on the way to Dubai and putting more pressure on demand for accommodation.”
Cost of living and rents rise
Inflation is on the up in both states – the latest official figures put the year-on-year rise in the cost of living for Abu Dhabi at 2.1%, while the figure is slightly higher, at 2.17%, in Dubai.
“It’s clear a lot of employers can see that they have to offer expats a better financial package to compete with other countries,” said the spokesman.
“Companies across most industry sectors are finding themselves with the same problem and the rate of housing allowance increases is higher than last year and the highest since the downturn in 2008.”
Expats make up around 90% of the UAE population of around 9.2 million and are employed at all levels – from labourers and maids to top-ranking executives and technical experts.
