Real-wage salary growth worldwide to slow this year: Korn Ferry
According to a recent report by Korn Ferry, real-wage salaries globally are expected to grow only an average of 1.0 percent in 2019. This is down from a 1.5 percent prediction for 2018.
“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 percent, up from 5.4 percent last year. Inflation-adjusted real wage increases are expected to be 2.6 percent, the highest globally, but down from 2.8 percent last year.
China’s real-wage forecasted growth for 2019 weakened at 3.2 percent, down from 4.2 percent last year. Japan saw a real-wage prediction of 0.1 percent for 2019 compared to the 2018 prediction of 1.6 percent. Asian countries that saw year-over-year increases include Vietnam’s forecast of 4.8 percent, up from 4.6 percent last year, and Singapore‘s forecast of 3.0 percent, up from 2.3 percent last year.
The Pacific sees the lowest real salary increase
Wages in the Pacific are forecast to grow by 2.5 percent and adjusted for inflation, the rise in real wages is predicted to be 0.3 percent. Australia will see a 2.5 percent top-line growth, a 2.3 percent inflation rate, and a 0.2 percent real wage increase. In New Zealand, a 2.5 percent salary increase is forecast, and with 2.2 percent inflation, is expected to see a 0.3 percent real salary increase.
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, Korn Ferry recommends that companies take a broader perspective by defining and agreeing upon their own measures of cost drivers, business strategy and local trading conditions, according to 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, he adds.