Cost of Living Fuels Candidate Demands, But Employers Remain in Control

As we step into the second quarter of 2025, Talent Higher’s latest research reveals an interesting contradiction in the UAE job market. On one hand, the rising cost of living is prompting candidates to push for better pay and benefits. On the other, employers, facing an abundance of available talent, are under less pressure to meet those demands. It’s a classic supply and demand imbalance, and for now, employers have the upper hand.

The Cost of Living Squeeze

Dubai’s cost of living index has jumped from 142 in 2024 to 115 this year. Housing, fuel, schooling, and other daily essentials are taking a larger share of household income. Meanwhile, salary growth has lagged behind. In fact, 30% of professionals reported receiving no bonus in the past year, and 33% are now expecting salary increases of 20–30% when they move roles.

It’s no surprise that compensation is front of mind. But while candidates are clear about their expectations, the market dynamics don’t always work in their favour. With more jobseekers than roles across many sectors, employers can afford to be selective.

Candidates Are Still Asking for More

Salary remains the top priority for 58% of candidates, according to our survey. But expectations go beyond the payslip. Work-life balance (28%) and learning and development opportunities (10%) are becoming increasingly important. In theory, this shows a maturing workforce focused on long-term value. In practice, candidates are often competing for fewer opportunities, which limits their ability to negotiate.

This doesn’t mean employers can afford to ignore these trends. Instead, they should approach them strategically. Understanding what candidates value most allows businesses to create offers that are competitive without being unnecessarily expensive. The goal is to deliver perceived value, not just monetary compensation.

How Employers Can Use Their Advantage Wisely

Yes, employers have more leverage right now, but that doesn’t mean they should rely on short-term thinking. Failing to meet even basic expectations risks disengagement, high turnover, and long-term damage to employer brand.

Companies that succeed in this environment are those that balance pragmatism with empathy. That might mean offering realistic salaries while reinforcing the total value of the role: hybrid work options, internal mobility, professional development, and workplace culture all count.

Even small changes, like transparent promotion pathways or a few extra days of leave, can help you secure top talent without breaking budget.

Final Thoughts

Candidate expectations are rising, but bargaining power isn’t evenly matched. That’s the tension defining hiring in 2025. Employers are in a position of control, but with that comes the responsibility to be smart.

The businesses that navigate this balance well will be the ones that retain their best people and build a stronger employer brand for the future.

All data can be found in Talent Higher’s 2025 Salary Guide.

Article by Catherine Farley, CEO, Talent Higher