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A new report by Hay Group division of Korn Ferry forecasts modest salary growth across the globe, in 2018 with real wage increases averaging at 1.5%, down from this year’s 2.3% prediction and 2016’s projection of 2.5%.
While Asia saw the highest real wage growth globally, the region forecasted a slowdown in salary growth before and after adjusting to inflation.
Before adjusting to inflation, salaries are forecasted to increase by 5.4% – down from 6.1% last year, while inflation-adjusted real wage increases are expected to be 2.8% – down from 4.3% last year.
In 2018, most countries in Asia are expected to see a slowdown in real wage growth from last year – including Singapore’s forecast of 2.3%, down from 4.7%; Malaysia’s prediction of 3.5%, down from 3.9%; Vietnam’s 4.6% prediction, down from 7.2%; and Japan at 1.6%, down from 2.1%.
China remained consistent with real wage increases predicted at 4.2% for 2018, compared to 4% last year.
In the Pacific, wages are forecasted to grow by 2.5%, which is an increase of 0.7% in real wages when adjusted for inflation.
Australia is expected to see a 2.5% top-line growth, a 2.1% inflation rate, and a resulting 0.4% real wage increase. While in New Zealand, a 2.5% salary increase is forecasted, with 1.5% inflation, for a 1% real salary increase.
With inflation rising in most parts of the world, Bob Wesselkamper, Korn Ferry global head of rewards and benefits solutions, noted: “The percentage of salary increase or decrease will vary by role, industry, country and region, but one thing is clear, on average, employees are not seeing the same real pay growth they did even one year ago.”
Just behind Asia, employees in Latin America are expected to see the second highest real wage growth.
Employees in Latin America are forecasted to see a 6.2% increase in wages. With inflation slowing down in the region, real wage increases will reach 2.1%, up from last year’s 1.1%.
Colombia, with an expected inflation of 2.7% and salary increase projected at 5.3%, is expected to see a real wage growth of 2.6%; while staff in Brazil can expect a real wage growth of 3.3% after adjusting a 7.3% projected increase with 4% inflation.
Elsewhere, in the world, North America, Western Europe and the Middle East were found to lag in wage growth with all three regions expecting real salary increases of 0.9%.
Eastern Europe and Africa were seen to fare slightly better, forecasting a real wage growth of 1.4% and 1.7% respectively.
Notably, in the United Kingdom, with the continued uncertainty following the Brexit decision, wages are forecasted to increase by just 2%. Combined with a 2.5% inflation rate, real wages are expected to stand at -0.5%.
Similarly, in the UAE, inflation of 4.6% combined with pay increases of only 4.1%, means that real wages are predicted to be -0.5%.
Over in the United States, an average 3% pay increase is predicted, which is the same as last year. After adjusting for the expected 2% inflation rate in 2018, the real wage increase stood at 1% – down from last year’s 1.9%.
While Canadian workers are expected to see salaries increase by 2.6%, and with inflation at 1.7%, will experience real wage growth of 0.9%.
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“In emerging economies, upskilling workers is crucial for companies to maintain a competitive advantage – and those skilled employees can expect to see wages rise as talent shortages in certain regions drive salaries upward,” Wesselkamper, said.
Benjamin Frost, Korn Ferry’s global general manager – pay, added: “While inflation indices are a solid benchmark for reviewing market trends in pay, we recommend that companies take a broader perspective by defining and agreeing upon their own measures of cost drivers, business strategy and local trading conditions.
“Compensation programs need to be regularly reviewed to make sure they align with changing business and market conditions.”
Photo / 123RF