As go salary increases in the United States, so they go the world over. Globally, average pay in most countries is predicted to increase by 1% to 3.5% above inflationary numbers, Mercer’s 2004 Global Compensation Planning Report shows. This is due to employers attempting to keep a lid on fixed costs though next year, even though there has been some encouraging news about the economic outlook worldwide, according to Mercer consultant Gareth Williams.
By comparison, Mercer’s projections for the United States and Canada in 2004 showed salary increases of 3.6% and 3.3%, respectively (See Pay Increases at 3.3% in 2003, 3.5% in 2004 , Mercer: Canadian Pay Hikes at 3.25% in 2004 ). Mercer points out that even though US and Canadian numbers may be low to employees used to a 4% salary increase, inflation is anticipated to come in at only 2.3% and 2.1%, respectively, in 2004 – equaling a net gain for North American employees. “Though the North American economy is expected to strengthen in 2004, most employers will maintain the survival tactics of the past two years,” says Williams.
This was the case for 40 of the 63 countries covered in the category. For example, in Western Europe, average pay increases in 2004 are expected to be highest in Greece, at 5%. However, inflation there is likely to be relatively high, too, at 3.5%. Employees in Italy, Ireland, and Portugal are also predicted to receive large pay raises of 4.5%, 4.4%, and 4.4%, respectively, while inflation is forecast to be 1.9%, 3.2%, and 2.2%. In the United Kingdom, pay is predicted to increase by 3.6% and inflation is likely to be 2.5%. Switzerland is expected to have the lowest pay growth, at 1.9%, with inflation forecast to be 0.7%.
There are a few diamonds among the global rough though, such as Indonesia, where employees can expect increases 6.5% above inflation thanks to 13% forecasted raises and inflation projections of 6.5%. Following Indonesia was:
- Bulgaria – raises 9%; inflation 3.9%
- Lithuania – raises 6.1%; inflation 1%
- South Korea – raises 7.5%; inflation 3%
- Taiwan – raises 4.5%; inflation 0.6%
- China – raises 5.3%; inflation 1.4%
- Chile – raises 6.3%; inflation 2.5%.
Venezuela on the other hand is a classic good news, bad news situation. Good news: employees in Venezuela can expect their pay to increase by around 29% next year. Bad news: inflation in Venezuela is forecast to rise by nearly 37%. Translation: workers will more than likely be worse off. Other nations struggling with inflation levels above projected pay increases include:
- Puerto Rico – raises 4.1%; inflation 5.5%
- Ukraine – raises 6%; inflation 7%
- Estonia – raises 2%; inflation 3%
- Slovakia – raises 7%; inflation 7%.
Copies of Mercer’s 2004 Global Compensation Planning Report cost $600 and are available from Mercer Global Information Services at (800) 333-3070.