Korn Ferry Hay Group 2017 salary forecasts: Wage increases slow globally
- Real wages up 2.3 percent, as pay rises combine with low inflation
- Asian workers to see biggest real wage rise, though China slows down
- North America lags toward bottom
TORONTO, Dec. 6, 2016 – A forecast issued today by the Hay Group division of Korn Ferry (NYSE: KFY) reveals that, adjusted for inflation, workers around the world are expected to see real wage increases of 2.3 percent, down slightly from last year’s prediction of 2.7 percent.
Highest real wage growth in Asia – but China slows down
In Asia, salaries are forecast to increase by 6.1 percent – down 0.3 percent from last year and 0.7 percent from the year prior. Real wages are expected to rise by 4.3 percent – the highest globally. The largest real wage increases are forecast in Vietnam (7.2 percent), Thailand (5.6 percent), Indonesia (4.9 percent) and India (4.8 percent). The biggest change in Asia is in China, where real wages increases are down nearly 2.5 percent, from 6.3 percent in 2016 to 4 percent in 2017 – reflecting lower growth predictions for the year ahead.
Eastern Europe faring better than Western Europe
According to the Korn Ferry Hay Group forecast, workers in Eastern Europe are set to see an average salary increase of 5.1 percent in 2017, and with inflation at 3 percent, will see real wages rise by 2.1 percent. With inflation much lower in Western Europe, workers there will see lower wage increases, with an average increase of 2.1 percent - with an average inflation rate of .4 percent, the real increase is 1.7 percent.
Despite the turmoil following the Brexit decision, the United Kingdom is faring fairly well, with predicted raises staying at 2.5 percent (the same as the last three years). Adjusted for inflation, real wages are to increase by 1.9 percent in 2017, which is slightly higher than the Western European average. Workers in France and Germany are forecast to see real wage rises of 1.5 percent and 2.2 percent respectively.
“Although not as high as last year when we saw a three-year high, there are still positive real wage gains across the globe,” said Benjamin Frost, Korn Ferry Hay Group Global Manager – Pay. “In addition to predicted salary increases, inflation is relatively low in most countries, which has a positive impact on real wages.”
North America lagging
North America is predicted to see slower salary increases than other regions, with only a 2.8 percent projected increase – the same as last year. Adjusted for inflation, the real wage increase is 1.4 percent. In the United States, a 3 percent salary increase is predicted. Adjusted for the 1.1 percent inflation rate, the real wage increase is 1.9 percent. Canadian workers will meanwhile see salaries increase by 2.5 percent and with inflation at 1.6 percent, will experience real wage growth of 0.9 percent.
Economic turmoil impacting workers in Latin America
Workers in Latin America are forecast to see the largest headline salary rises in 2017 at 7 percent. However, due to high inflation in the region (5.9 percent), they are expected to see real wage increases of only 1.1 percent. In Colombia, workers can expect to see a 6.8 percent raise, but with an inflation rate of 7.6 percent, real wages will be down 0.8 percent. In Brazil, the expected salary increase is 8.8 percent, and with 8.4 percent inflation, the real increase is 0.4 percent.
Inflation in Middle East tempers real wage increases
2017 looks positive for workers in the Middle East. Despite plunging oil prices and economic and political turmoil throughout the region, salaries are forecast to rise by 4.5 percent. With inflation at 2 percent, real wages will rise 2.5 percent.
Jordan (6.3 percent) and Lebanon (6.1 percent) are forecast to see the highest real wage increases in the region, with the UAE set to see the slowest real wage growth (0.5 percent) – down from 0.9 percent last year.
Africa sees slowest real wage growth of all regions
Although top-line salaries will increase 6.4 percent in Africa, high inflation means the real increase is only 0.7 percent. High inflation in Egypt means it is one of two countries in the region set to see a cut in real wages at -3.0 percent, which is worse than the year prior, at -0.4 percent. Algeria is the other nation in Africa to see negative real wage increases, at -1.1 percent.
Pacific increases middle of the pack
Wages in the Pacific region are forecast to come in at a 2.8 percent growth, with a 1.8 adjusted for inflation growth. Australia will see a 3 percent top-line growth, a 1.4 percent inflation rate, and a 1.6 percent real wage increase. In New Zealand, a 2.5 percent salary increase is forecasted, with 0.6 percent inflation, for a 1.9 percent real salary increase.
“Asia continues to drive growth in wages globally as companies look set to increase pay across the board,” said Frost, “However, the global labor market is in flux as slower economic growth in mature economies keeps a check on pay rises. 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 up.”
About the study
The data was drawn from Hay Group PayNet which contains data for more than 20 million job holders in 25,000 organizations across more than 110 countries.
It shows predicted salary increases, as forecasted by global HR departments, for 2017 and compares them to predictions made at this time last year regarding 2016. It also compares them to 2016 inflation data from the Economist Intelligence Unit. When compiling global and regional averages, researchers left out countries with dramatically higher inflation rates or currency devaluation (Venezuela, Argentina, Russia and Ukraine).
An interactive site with more detailed figures, is here: http://bit.ly/2fNAa33
An infographic with headline figures for each country, is here: http://bit.ly/2h1WEgT
About Korn Ferry
Korn Ferry is the preeminent global people and organizational advisory firm. We help leaders, organizations and societies succeed by releasing the full power and potential of people. Our nearly 7,000 colleagues deliver services through Korn Ferry and our Hay Group and Futurestep divisions. Visit kornferry.com for more information.