More than one third of businesses in the Middle East are planning to expand this year as companies show signs of recovery from the effects of the global financial crisis.
A poll of 600 businesses conducted by Hay Group, a management consultancy, showed that managers of regional firms were rethinking the virtues of being cautious as the world economy gets back on track.
"Following two years of cautious business plans, organisations are now looking to invest their profit and according to 36 per cent of respondents the main business priority for 2012 is expansion," the report said.
Rounds of job cuts that occurred during the past few years were expected to be fewer in the year ahead, according to companies polled.
"Between 2009 until mid-2011, HR departments were focusing on reduction of payroll costs and cost-cutting," said Vijay Gandhi, the regional director at Hay Group. "It's a sign of recovery that efforts to retain talent are being stepped up."
In a sign of an increasingly competitive job market, slightly more than half of the companies polled said they would prioritise holding on to their best employees in the year ahead.
"In one of the region's more established markets for pay, UAE-based organisations report they will have a particular focus on paying competitively," said Harish Bhatia, a manager at Hay Group.
Companies in the UAE also indicated optimism, with about 43 per cent of businesses saying they expected to increase sales by at least 15 per cent in the year ahead. The improved prospects for employment in the year ahead come on the heels of a strongly improved job market during the final half of last year.
The Monster Employment Index, which measures job demand through numbers of online advertisements, showed a 36 per cent increase in job advertisements in the UAE last year.
The education, healthcare, IT and telecommunications sectors registered the largest increases in unfilled positions.
However, indicators from the UAE's private sector show that while business confidence remains strong, a sharp rise in staff numbers has not yet materialised this year.
The HSBC Purchasing Managers' Index rose to 52.4 last month from 51.7 in December. A reading above 50 indicates business confidence, while a number below 50 indicates contraction.
But the data showed only a "marginal" increase in staff numbers in the non-oil sector last month.
"Most firms appeared reluctant to increase staff levels at their business units as cost pressures remained strong," HSBC's report said.