After promising increases in 2018, global wage growth could take a step back in 2019.
A forecast by Korn Ferry found that salaries globally are expected to grow by an average of 1%, which is down from the 1.5% prediction for 2018. Salaries are adjusted for inflation.
“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.”
Highest Real-Wage Growth in Asia
In Asia, salaries are forecast to increase by 5.6%, up from 5.4% last year. Inflation-adjusted real-wage increases are expected to be 2.6%, the highest globally, but down from 2.8% last year.
China’s real-wage forecasted growth for 2019 weakened at 3.2%, down from 4.2% last year. Japan saw a real-wage prediction of 0.1% for 2019 compared to the 2018 prediction of 1.6%. Asian countries that saw year-over-year increases include Vietnam’s forecast of 4.8%, up from 4.6% last year, and Singapore’s forecast of 3%, up from 2.3% last year.
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 6.6% in 2019. After taking inflation into account, real wages are forecast to rise by 2%, which is up from 1.4% last year. In Western Europe, workers are expected to see lower wage increases, with an average increase of 2.5%, and inflation-adjusted real wage increases of 0.7%. This is down from the predicted 0.9% real-wage growth of last year.
Wages are predicted to increase 2.5% in the United Kingdom. Combined with a 1.9% inflation rate, real wages are expected to increase by 0.6%. This is up more than a percentage point from 2018, when wages were predicted to decrease by -0.5%. Employees in two of Europe’s largest economies, France and Germany, are forecast to see real-wage rises of 0.5% and 1% respectively.
North America Lagging
In North America, the average salary growth is predicted to be 2.8% in 2019, and when adjusted for inflation, the real-wage growth is expected to be 0.6%.
In the United States, an average 3% pay increase is predicted, which is the same as last year and the year before. Adjusted for the expected 2.4% inflation rate in 2019, the real wage increase is forecast to be 0.6%, down from last year’s 1%. Canadian workers will see salaries increase by 2.6%, and with inflation at 2%, will also experience real-wage growth of 0.6%.
Inflation Tempers Salary Growth in Africa
Although top-line salaries will increase by 7.7% in Africa, high inflation means the real increase is predicted to be only 0.9%.
In Egypt, salaries are expected to increase by 15%, but a 14.4% inflation rate means employees will only see a 0.6% real-wage increase.
Latin America Sees Year-Over-Year Drop in Real Wage Growth
Employees in Latin America are forecast to see a 4.6% gain in wages. With inflation, the real-wage increase in the region is expected to be 1.3%. This is down from 2.1% real-wage growth predictions from last year.
In Colombia, inflation is expected to be 2.9% for 2019. With a salary increase projected at 5%, this puts real wages for Colombia up 2.1%. In Brazil, the expected salary increase is 4.2%, and with 4.3% inflation, workers are expected to see a -0.1% decrease in real wages.
Middle East Sees Second-Lowest Real Salary Increase
In the Middle East, wages are expected to increase by 3.6%, compared to 3.8% last year. Inflation-adjusted wage increases are predicted to be 0.4%, compared to 0.9% last year and 2.5% the year before. Things are looking better in the United Arab Emirates this year, with an inflation rate of 3.2% combined with pay increases of 3.9%, which means that real wages are expected to increase by 0.7%. Last year real wages were predicted to fall by -0.5%.
The Pacific Sees the Lowest Real Salary Increase
Wages in the Pacific are forecast to grow by 2.5%, and adjusted for inflation, the rise in real wages is predicted to be 0.3%.
Australia will see a 2.5% top-line growth, a 2.3% inflation rate, and a 0.2% real wage increase. In New Zealand, a 2.5% salary increase is forecast, and with 2.2% inflation, is expected to see a 0.3% real salary increase.