Workers around the world are expected see real wage increases of 2.5%, according to a Korn Ferry Hay Group forecast.
This is the highest increase in three years, the forecast says, as pay increases combine with historically low inflation to leave employees better off.
“This year’s global salary forecast shows that, for the majority of countries, real wage increases in 2016 are set to be the highest in three years,” said Philip Spriet, global managing director for productized services at Hay Group, in a statement. “Differing macro-economic conditions means there are stark variations globally, but overall decent pay increases, coupled with extremely low (and in some cases, zero) inflation, mean that the outlook is positive for workers.”
The forecast uses data from Hay Group PayNet, which contains information for more than 20 million job holders in 24,000 organizations across more than 110 countries.
It shows projected salary increases, as forecasted by global HR departments, for 2016 and compares them to predictions made at this time last year regarding 2015. It also compares them to inflation predictions for 2016 from the Economist Intelligence Unit.
After five years in which annual wage increases have averaged around 2% in the U.S., Korn Ferry Hay Group predicts a 3% salary increase for American workers in 2016. Along with a 0.3% inflation forecast, this equals a real wage increase of 2.7%.
This upward trend can also be seen across North America, where Korn Ferry says the labor market is buoyant. According to the forecast, Canadian workers will see salaries increase by 2.6% and experience real wage growth of 1.3%.
Meanwhile, Korn Ferry predicts the highest real wage growth will be seen in Asia, despite economic slowdown.
In Asia, salaries are forecast to increase by 6.4% – down 0.4% from last year. However, real wages are expected to rise by 4.2% – the highest globally.
The largest real wage increases are forecast in Vietnam (7.3%), China (6.3%) and Thailand (6.1%).
“In fact, despite China’s economic slowdown, coupled with plummeting stock markets and reduced exports, workers in the country are set to see an 8% salary increase in 2016 as employment rates continue to grow due to the increasing need for skilled workers and the sustained rise of the burgeoning middle class,” according to the forecast.
In Europe, the forecast also remains positive.
According to the Korn Ferry Hay Group forecast, workers across Europe are set to see an average salary increase of 2.8% in 2016 and, with inflation at 0.5%, will see real wages rise by 2.3%.
This average excludes two outlier countries, though.
Thanks to specific political issues causing high inflation, real wage increases will be impacted in the Ukraine and Russia.
Workers in Ukraine are forecast to see the biggest wage rises in Europe (11.5%), but, due to high inflation (48.3%), real wages are set to drastically reduce by 36.8%.
In Russia, the outlook is similar.
According to the Korn Ferry, the impact of economic sanctions and falling oil prices hit the Russian economy, and despite an average salary increase of 7%, with inflation at 14.5%, real wages are set to fall by 7.5%. This is significantly more than the 0.7% decrease in real wages seen last year.
Meanwhile the outlook is positive for the U.K., France and Germany.
In the U.K., salary increases will stay at 2.5% in the UK (the same as the last two years). However, low inflation means that real wages in the U.K. will increase by 2.3% in 2016. Workers in France and Germany are also forecast to see real wage rises of 1.7% and 2.7%, respectively.
In Greece, the picture is similar. Despite economic issues, salaries are set to increase 2% (compared to 1.3% last year) with deflation leading to real wage rises of 3.4% expected in 2016.
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