|But after inflation employees there will have the second lowest real wage increases in Europe|
|Employees in the UK can expect to see their salaries increase by an average of 3 per cent next year, according to the latest Salary Trends survey by ECA International, the world’s leading provider of knowledge, information and technology for the management and assignment of employees around the world.
“Next year will be the 4th year in a row where companies have reported 3 per cent wage increases in the UK,” said Steven Kilfedder, Manager, Cost of Living and Remuneration Services at ECA International. “If inflation is 2.3% as IMF predictions indicate, employees in the UK will experience increases of just under 1% in real terms. While this would be higher than they’ve seen in recent years these would be the 2nd lowest real wage increases in Europe after Finland, and are among the lowest of all the countries we surveyed.”
The highest pay increases in Europe are being forecast by companies in Russia and the Ukraine. Employees there can expect to see 8 per cent salary hikes next year. However, the average pay rise across Europe is anticipated to be 3.5 per cent.
Companies in Switzerland and Greece are forecasting the lowest wage increases in Europe and in the survey. Employees there can expect salary rises of around 2 per cent. However, despite these low increases little, if any, of this is likely to be eroded by inflation in contrast to many of their peers who will be worse off than them in real terms.
ECA’s 2013/2014 Salary Trends Survey reports on current and projected salary increases for local employees. The data is used by companies to monitor pay rises in both the home and host locations of their expatriate staff so that they can update pay packages according to the salary systems they use – and ensure that system is still the most effective for meeting business objectives. This year, it is based on information collected from 316 multinational companies across 64 countries and regions.
Wages will rise almost 6 per cent in 2014 on average according to company forecasts from around the globe, with most employers setting increases at the same or very similar levels to this year. Asia and Latin America are the regions that will see the highest wage increases, with companies there forecasting rises of approximately 10 per cent, and 11 per cent respectively. However, inflation in those regions is also expected to be higher. In Latin America, for example, increases after inflation will average 1 per cent – the lowest globally.
Once again, the survey’s highest pay rises are being forecast by companies in Venezuela. Employers there are predicting 26 per cent pay rises for staff next year on average. However, that figure trails well behind inflation forecasts: the IMF is predicting 38 per cent inflation in Venezuela next year, leaving employees there facing a spending power reduction of 12 per cent in real terms.
While employees in Argentina are set to see the second highest salary increases next year they are not likely to experience much of an uplift in real terms – most independent analysts are putting inflation there at around 25 per cent which is well above the official 11.4 per cent figure.
Companies operating in Mainland China are predicting salary increases of 8 per cent in 2014. Allowing for inflation, Chinese workers will see a 5 per cent increase in real terms – the highest in Asia and among the highest worldwide.
“The on-going need to attract and retain skilled workers who are in short supply in China, is driving up wage increments there to among the highest levels in our survey. Over time, this trend may significantly narrow the traditional salary gap between China and Singapore,” said Kilfedder. “Our recent global research on buying power around the world also suggested that Chinese executives could even be better off than their United States counterparts by 2017 if the current trends continue. At present, salaries in China are increasing at more than double the pace of salaries in the United States.”
In both the US and Canada, companies are predicting 3 per cent wage increases, while those in Europe are forecasting 3.5 per cent rises next year. Companies in Australia are forecasting 4 per cent increases for their staff in 2014 while employees in the Middle East are set to see an average uplift of 4.8 per cent. Companies in South Africa are forecasting 7% wage rises for their staff.
Factoring in inflation, employees in Asia are likely to receive the biggest average increases in real terms.
Nominal salary increase forecast rankings for Europe
‘Real’ salary increase forecast rankings for Europe
‘Real terms’ refers to wages that have been adjusted for inflation. Forecast inflation rates are based on information from the International Monetary Fund.