Dubai’s Job Market Feels the Strain as Expats Flood the City - Bloomberg
Trefor Murphy, the head of recruitment firm Cooper Fitch, recalls a time when a Dubai job posting might have received just about 100 applicants. These days, some draw as many as 2,000 as foreigners flood a city reputed for lucrative paydays and upscale lifestyles.
That expat influx is now making Dubai’s job market “a victim of its own success,” Murphy said.
The effect of the surging population is already being widely felt.
Rents have surged to record levels,
traffic is regularly snarled and top
schools are running full. The over abundance of talent is weighing on salaries, recruiters say.
Dubai shot into the international spotlight after the Covid-19 pandemic as foreigners from around the world arrived to capitalize on its easy visa policies and low taxes. Three years later, residents are facing the flip side of that boom as the city grows more expensive and competition for plum jobs rises.
A Cooper Fitch survey found that salaries at many positions could remain flat this year.
Salary estimates differ across hiring firms and some individuals continue to command outsized pay increases. The Dubai Media Office said the Gulf emirate is adding new companies that will create jobs. It pointed to a Mercer study projecting a 4% average salary rise this year, with plenty of firms planning to increase their workforce.
An influx of expats is denting the plush salaries and luxury lifestyles on offer in Dubai. A population surge since the pandemic has seen costs rise and competition for jobs increase.
But most headhunters and executives interviewed by Bloomberg agreed that Dubai’s financial and lifestyle benefits for foreign executives are moderating because there are too many people vying for the same positions.
Since 2020, over 400,000 people have arrived, pushing the population to more than 3.8 million. The surge in
traffic jams during rush hours has led the city to increase the fees of its toll operator,
Salik Co. Rents for single family homes, known locally as villas, have soared 94% since the start of the pandemic, while apartments surged 66%, according to real estate consultancy JLL.
Last year, Dubai jumped up the rankings to become the costliest city in the Middle East for international employees, according to data from consultancy
Mercer. It ranked 15th on the global order, up three places from 2023 and topping Tel Aviv and Riyadh regionally. That has many families saying they are saving much less than they once did.
Many executives continue to take home more in Dubai because of the absence of income tax. Still, the “salary margin between London and Dubai is narrowing as employers don’t have to offer a lot more to entice people,” said
Nick Aiyegbusi, an associate director at Robert Walters Middle East specializing in legal recruitment.
There was a time in the not-too-distant past when a professional services worker in London could expect a big pay rise and plenty of perks for accepting a job offer in Dubai, including generous packages that covered school and housing.
But employers in the Middle Eastern financial hub no longer need to offer big perks to lure new hires, according to recruiters. Tax-free pay is sometimes the only real incentive.
“Over the past two or three years we have seen pressure on salaries,” said Gareth El Mettouri, who until recently was a senior recruiter at a large firm in Dubai. “In my opinion this is because we are seeing so much talent relocate here from the UK.”
But there are problems well beyond pay. Foreigners have almost no access to public schools, and there are now wait-lists at many private institutions. One school just announced it would open with fees of as much as
$33,000 a year.
All that’s put new pressure on policymakers to manage the demands of a growing population. Dubai has 11 large-scale road projects in progress and 22 more planned by 2027 to reduce congestion. The government it trying to ensure the property market remains accessible, according to the city’s media office. Its efforts include providing installment plans and maintaining the balance between supply and demand.
Despite the rising pressures, there hasn’t be any significant outflow of people. That’s partly because Dubai’s of tax-free income and many residents see few opportunities elsewhere.
In 2021, the UAE had
introduced a new class of visas in a series of moves aimed at attracting more people and boosting growth. Long-term ‘golden visas’ allowed high-skilled workers to remain in the country for 10 years without being tied to one employer. The government also allowed foreigners to own 100% of businesses in some industries, lifting a federal requirement that had long capped their ownership of local companies at 49%.
Many expat residents are finding ways to adapt. Surging rents are now forcing some to move to the outskirts of the city or even shift to the less glamorous
emirate of Sharjah.
“The Dubai challenge has always been to decide if it wants people to stay longer term,” said Karen Young, a senior research scholar at Columbia University’s Center on Global Energy Policy. “New rules on long-term visas and property holding have encouraged that. But I don’t know if we see the number of people putting down roots of 20 years or more really changing that much.”
