The big pay turnaround: 2015 Salary Forecasts
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The big pay turnaround: Eurozone recovering, emerging markets falter in 2015
• Global salary rises up compared to last year
• But workers in key emerging markets will experience real wage cuts
• Increase in Europe driven by previously struggling countries such as Ireland and Greece
Latest data from global management consultancy Hay Group reveals that salaries are increasing at a faster rate than last year despite disappointing growth in several key emerging markets.
Struggling emerging markets
Salaries across the globe are set to rise by 5.4% on average for 2015 – compared to 5.2% last year. But this average masks a significant slowdown in emerging markets like Brazil, Russia and Ukraine, which have been the key drivers of growth in recent years.
Workers in these countries can expect to see salary rises of 6.1%, 6.8% and 6.8% respectively. However, with inflation (predicted to be 6.5%, 7.5% and 10.7%), employees will experience real wage cuts of 0.4%, 0.7% and 3.9%.
Signs of hope in Europe
Salaries in Europe have been buoyed by the improving performance of economies that have struggled recently. Most notably, Greece and Ireland are set to see salary rises of 1.3% and 1.4% respectively, a real wage growth of 2.5% and 1.1% – compared to 0.8% and 0.2% last year, as both countries return to economic growth.
Across the region, salaries are expected to rise by 3.1%. And with low inflation (predicted to be 1.5%), employees will see real average wage growth of 1.6%.
It is also good news in the UK for employees who will start to see a recovery in wage growth. While salary rises of 2.5% are the same as last year, with lower inflation (predicted to be 1.7%) employees will experience an increase in real income (0.8%) for only the second time since 2009.
Turkey is forecast to experience the largest increase in Europe with pay rises up to 9.0% but workers will still feel a squeeze on income with inflation predicted to be 8.9%.
Ben Frost, consultant at Hay Group, comments: “This year’s global forecast shows pay rises rising at a higher rate this year compared to last. However, this conceals stark variations from region to region and country to country. Each market has its own complexities and organizations must understand the detail if they want to attract and retain the best workers. The big turnaround is between Europe and the emerging markets. Real pay is now rising in many European markets, but in key emerging economies, which have been the boom area of the last 10 years, real wages are falling.”
Strong growth in the Middle East and Africa
Despite broader economic and political turmoil, salaries in the Middle East and Africa are forecast to rise by 5.6% and 6.9% respectively, a real growth in income of 2.9% and 2.0% as inflation is predicted to remain relatively low.
Ben Frost concludes: “To make low salary rises stretch further, workers who are performing well may receive higher than average pay increases, while it’s likely that poor and average performing workers will receive little if no increase. However, a business is nothing without its people and, during periods of low growth, organizations must think creatively about how they motivate and reward their employees.”
Ends
Please note: this study should be credited to ‘global management consultancy, Hay Group’, and not ‘Hay’ or ‘Hays’, which are separate and unrelated organisations.