- Adjusted for Inflation, Real Wages Up Only an
Average of 1.5 Percent –
- U.S. Real Wage Growth Half of What it Was
Last Year -
- U.K., UAE and Egypt See Declines in Real
Wages-
- Asia Sees Highest Real Wage Growth, Though at
Slower Pace Than Last Year -
A forecast issued today by the Hay Group division of Korn Ferry
(NYSE: KFY) reveals that, adjusted for inflation, employees around
the world are expected to see real wage increases of only an
average of 1.5 percent, down from 2017’s prediction of 2.3 percent
and 2016’s prediction of 2.5 percent.
“With inflation rising in most parts of the world, we’re seeing
a cut in real wage increases across the globe,” said Bob
Wesselkamper, Korn Ferry Global Head of Rewards and Benefits
Solutions. “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.”
Australasia Sees the Lowest Real Salary Increase
Wages in Australasia are forecast to grow by 2.5 percent, which
is an increase of 0.7 percent in real wages when adjusted for
inflation. Australia will see a 2.5 percent top-line growth, a 2.1
percent inflation rate, and a 0.4 percent real wage increase. In
New Zealand, a 2.5 percent salary increase is forecast, with 1.5
percent inflation, for a 1 percent real salary increase.
North America Lagging
In the United States, an average 3 percent pay increase is
predicted, which is the same as last year. Adjusted for the
expected 2 percent inflation rate in 2018, the real wage increase
is 1 percent – down from last year’s 1.9 percent. Canadian workers
will see salaries increase by 2.6 percent, and with inflation at
1.7 percent, will experience real wage growth of 0.9 percent.
Eastern Europe Faring Better than Western Europe
According to the Korn Ferry forecast, employees in Eastern
Europe are set to see an average salary increase of 6 percent in
2018. However, after taking inflation into account, real wages will
only rise by 1.4 percent, which is down from 2.1 percent last year.
In Western Europe, workers are expected to see lower wage
increases, with an average increase of 2.3 percent, and
inflation-adjusted real wage increases of 0.9 percent.
With the continued uncertainty following the Brexit decision,
wages in the United Kingdom are up just 2 percent. Combined with a
2.5 percent inflation rate, real wages are expected to decrease by
-0.5 percent. This is in contrast to 2017, when inflation-adjusted
wages in the U.K. were up 1.9 percent. Employees in two of Europe’s
largest economies, France and Germany, are forecasted to see real
wage rises of 0.7 percent and 0.8 percent respectively.
Smaller Increases in the Middle East
In the Middle East, wages are expected to increase by 3.8
percent, compared to 4.5 percent last year. Inflation-adjusted wage
increases are predicted to be 0.9 percent, compared to 2.5 percent
last year. In the UAE, inflation of 4.6 percent combined with pay
increases of only 4.1 percent, means that real wages will fall by
-0.5 percent.
Jordan and Lebanon saw the biggest drops in the region, with
Jordan predicted to have a 1.6 percent real wage growth, down from
6.3 percent last year, and Lebanon predicted at 1.8 percent
compared to 6.1 percent last year.
Inflation Tempers Salary Growth in Africa
Although top-line salaries will increase by 8.5 percent in
Africa, high inflation means the real increase is only 1.7 percent,
which is up from 0.7 percent last year. In Egypt, top-line salaries
will increase by 15 percent, but an 18.8 percent inflation rate
means employees will see a cut in real wages of -3.8 percent.
Latin America Sees Second-Highest Real Wage Growth
Employees in Latin America are forecasted to see a 6.2 percent
increase in wages, and with inflation slowing down in the region,
real wage increases will reach 2.1 percent, up from last year’s 1.1
percent. In Colombia, inflation is expected to be 2.7 percent for
2018. With a salary increase projected at 5.3 percent, this puts
real wages for Colombia up 2.6 percent. In Brazil, the expected
salary increase is 7.3 percent, and with 4 percent inflation, the
real increase is expected to reach 3.3 percent.
Highest real wage growth in Asia – Though Increases Slowed
from Previous Year
In Asia, salaries are forecast to increase by 5.4 percent – down
from 6.1 percent last year. Inflation-adjusted real wage increases
are expected to be 2.8 percent – the highest globally, but down
from 4.3 percent last year. China remained consistent with real
wage increases predicted at 4.2 percent for 2018, compared to 4
percent last year. Most countries in this region saw a drop in
year-over-year real wage prediction increases – including Vietnam’s
forecast of 4.6 percent, down from 7.2 percent, Singapore at 2.3
percent, down from 4.7 percent, and Japan at 1.6 percent, down from
2.1 percent.
“Slower economic growth in mature economies keeps a check on pay
raises,” said Wesselkamper. “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.”
Korn Ferry pay experts recommend taking a holistic approach when
determining pay.
“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,” said
Benjamin Frost, Korn Ferry’s Global General Manager – Pay.
“Compensation programs need to be regularly reviewed to make sure
they align with changing business and market conditions.”
About the study
The data was drawn from Korn Ferry’s pay database 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 2018 and compares them to predictions made at this
time last year regarding 2017. It also compares them to 2018
inflation data from the Economist Intelligence Unit.
Our interactive site with more detailed figures, and
downloadable infographic with headline figures for each country are
here:
Editor’s Note: Global averages exclude Venezuela,
Argentina and Ukraine, and regional averages exclude Venezuela due
to particularly high inflation.
Region Country
2018salaryforecast
2018inflationforecast
2018"real"salaryincrease
2017salaryforecast
2017"real"salaryincrease
East Europe Albania 2.6%
2.8% -0.2% - - Africa
Algeria 6.5% 5.7%
0.8% 5.6% -1.1% Latin America
Argentina 21.9% 14.6%
7.3% 28.5% -12.5% East
Europe Armenia 5.3% 3.3%
2.0% - - Pacific
Australia 2.5% 2.1%
0.4% 3.0% 1.6% West Europe
Austria 2.5% 1.7%
0.8% 2.0% 1.1% East Europe
Azerbaijan 10.0% 5.2%
4.8% - - Middle East
Bahrain 4.0% 2.1%
1.9% 5.0% 1.8% East Europe
Belarus 10.2% 10.5%
-0.3% - - West Europe
Belgium 3.0% 1.7%
1.3% 2.8% 1.0% Latin America
Bolivia 6.8% 4.4%
2.4% - - Africa
Botswana 4.7% 4.0% 0.7%
5.4% 2.0% Latin America
Brazil 7.3% 4.0% 3.3%
8.8% 0.4% East Europe
Bulgaria 3.8% 2.0% 1.8%
4.0% 4.7% North America
Canada 2.6% 1.7% 0.9%
2.5% 0.9% Latin America
Chile 4.8% 2.7% 2.1%
4.9% 1.0% Asia China
6.0% 1.8% 4.2%
6.1% 4.0% Latin America Colombia
5.3% 2.7% 2.6%
6.8% -0.8% Latin America Costa
Rica 3.7% 3.3% 0.4%
5.0% 4.6% East Europe
Croatia 2.8% 1.8% 1.0%
- - West Europe Cyprus
3.7% 1.3% 2.4%
2.0% 3.1% East Europe Czech
Republic 3.9% 2.0% 1.9%
2.8% 2.2% West Europe
Denmark 2.0% 1.9% 0.1%
2.1% 1.7% Latin America
Dominican Republic 5.1% 3.8%
1.3% 5.5% 3.9% Latin America
Ecuador 5.0% 0.6%
4.4% 5.0% 3.3% Africa
Egypt 15.0% 18.8%
-3.8% 9.8% -3.0% Latin America
El Salvador 3.7% 1.5%
2.2% 3.4% 2.7% East Europe
Estonia 3.5% 3.0%
0.5% 3.3% 3.1% West Europe
Finland 1.0% 1.2%
-0.2% 1.0% 0.6% West Europe
France 2.0% 1.3%
0.7% 1.8% 1.5% East Europe
Georgia 5.7% 3.1%
2.6% - - West Europe
Germany 2.4% 1.6%
0.8% 2.5% 2.2% Africa
Ghana 15.6% 9.7% 5.9%
- - West Europe Greece
2.0% 1.0% 1.0%
2.0% 2.1% Latin America
Guatemala 4.7% 4.7% -0.0%
5.0% 0.6% Latin America
Honduras 5.1% 4.1% 1.0%
6.0% 3.1% Asia Hong Kong
4.0% 2.3% 1.7%
4.2% 1.5% East Europe Hungary
4.6% 2.9% 1.7%
3.0% 2.9% Asia India
9.0% 4.3% 4.7%
10.0% 4.8% Asia Indonesia
8.0% 4.6% 3.4% 8.6%
4.9% Middle East Iraq
3.0% 2.0% 1.0% -
- West Europe Ireland 2.3%
0.3% 2.0% 2.0%
2.0% West Europe Italy 2.7%
0.9% 1.8% 2.6%
2.6% Asia Japan 2.0%
0.4% 1.6% 2.0%
2.1% Middle East Jordan 4.0%
2.4% 1.6% 5.5%
6.3% East Europe Kazakhstan 9.0%
6.2% 2.8% 8.6%
-5.8% Africa Kenya 7.5%
6.5% 1.0% - - Asia
Korea 4.5% 1.7%
2.8% 5.0% 4.1% Middle East
Kuwait 4.3% 3.6%
0.7% 4.1% 0.8% East Europe
Latvia 4.0% 3.0%
1.0% 4.0% 4.4% Middle East
Lebanon 5.0% 3.2%
1.8% 5.1% 6.1% East Europe
Lithuania 5.0% 2.8%
2.2% 4.3% 3.8% West Europe
Luxembourg 2.6% 1.6%
1.0% 2.8% 2.9% Asia
Malaysia 6.0% 2.5%
3.5% 5.8% 3.9% Africa
Mauritius 4.2% 1.3%
2.9% - - Latin America
Mexico 4.6% 3.9%
0.7% 4.6% 1.9% Africa
Morocco 3.8% 1.2% 2.6%
3.5% 1.8% Africa
Mozambique 10.0% 6.5%
3.5% - - Africa Namibia
7.0% 5.8% 1.2%
- - West Europe Netherlands
2.6% 1.4% 1.2%
2.5% 2.3% Pacific New Zealand
2.5% 1.5% 1.0%
2.5% 1.9% Latin America
Nicaragua 6.6% 4.5% 2.1%
5.8% 2.0% Africa Nigeria
10.8% 13.9% -3.2%
- - West Europe Norway
2.5% 1.8% 0.7%
2.0% -1.5% Middle East Oman
3.0% 2.2% 0.8%
3.0% 1.8% Latin America Panama
3.0% 1.4% 1.6%
4.0% 3.2% Asia Papua New Guinea
4.0% 6.6% -2.6% -
- Latin America Peru 4.3%
2.8% 1.5% 5.0%
1.6% Asia Philippines 5.0%
2.2% 2.8% 6.0%
4.3% East Europe Poland 3.5%
2.2% 1.3% 3.0%
3.8% West Europe Portugal 2.0%
1.3% 0.7% 2.0%
1.3% Middle East Qatar 3.7%
2.6% 1.1% 5.0%
2.1% East Europe Romania 5.0%
2.5% 2.5% 4.3%
5.7% East Europe Russian Federation
7.0% 4.0% 3.0%
7.0% -0.1% Middle East Saudi Arabia
3.2% 3.1% 0.1%
5.0% 0.8% East Europe Serbia
4.8% 2.7% 2.1%
4.1% 3.0% Asia Singapore
3.7% 1.4% 2.3%
4.0% 4.7% East Europe Slovakia
3.0% 1.7% 1.3%
2.6% 3.0% Africa South Africa
7.0% 5.4% 1.6%
7.0% 0.5% West Europe Spain
2.0% 1.0% 1.0%
1.9% 2.3% West Europe Sweden
2.0% 1.8% 0.2%
2.3% 1.5% West Europe Switzerland
1.7% 0.6% 1.1%
1.5% 1.8% Asia Taiwan
4.0% 0.7% 3.3% -
- Africa Tanzania 7.9%
5.2% 2.7% -
- Asia Thailand 5.5% 1.0%
4.5% 5.8% 5.6% Africa
Tunisia 7.1% 4.9%
2.2% 7.3% 3.8% East Europe
Turkey 9.0% 8.0%
1.0% 8.9% 1.2% Africa
Uganda 8.0% 5.5%
2.5% - - East Europe
Ukraine 15.0% 10.6% 4.4%
11.3% -1.9% Middle East
United Arab Emirates 4.1% 4.6%
-0.5% 3.0% 0.5% West Europe
United Kingdom 2.0% 2.5%
-0.5% 2.5% 1.9% North
America United States of America 3.0%
2.0% 1.0% 3.0%
1.9% Latin America Uruguay 7.9%
6.8% 1.1% -
- East Europe Uzbekistan 7.3%
15.0% -7.7% - -
Latin America Venezuela 83.0%
1104.2% -1021.2% 110.9%
-373.9% Asia Vietnam 8.6%
4.0% 4.6% 10.0%
7.2% Africa Zambia 12.3%
6.9% 5.4% - -
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 more than
7,000 colleagues deliver services through Korn Ferry and our Hay
Group and Futurestep divisions. Visit kornferry.com for more
information.
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version on businesswire.com: http://www.businesswire.com/news/home/20171212005011/en/
Korn FerryTracy Kurschner,
612.309.3957Tracy.Kurschner@KornFerry.com
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