US 2006 Pay Hikes to Lag Other Nations

October 3, 2005 (PLANSPONSOR.com) - US employees are expected to trail their counterparts elsewhere around the world in the level of 2006 salary increases, according to a new survey.

A news release from Mercer Human Resource Consulting said that US average salary hikes next year are predicted to be beat inflation by 1% – a figure that lags the average global amount likewise predicted by Mercer of 2.4% ahead of inflation. The global figure compares to 1.9% in 2005.

Salaries in both the US and Canada are forecast to increase by 3.6%. However, employees in Canada, where inflation is expected to be 1.9% for a net gain of 1.5%, will fare better than those in the US, where inflation is expected to be 2.6% for a net gain of 1%.

Mercer’s report examining pay trends in nearly 70 countries found that a verage pay in seven in 10 (69%) of the countries covered, including the UK and the US, is predicted to increase by between 1% and 3.5% above inflation.

The study also found a minority of countries will experience rises which are more than double the global average. The greatest increases are expected in India, Egypt, and Lithuania where employees are forecast to receive pay rises of 7.3%, 7.1%, and 5.5% above inflation, respectively.

Greg Cornish, global leader of Human Capital Advisory Services at Mercer, said: “We’ve seen strong global economic growth in the past couple of years and all the signs indicate this is set to continue in 2006. With this growth and more stable inflation we anticipate next year’s pay rises to be higher, in real terms, than this year’s.”

Data for Mercer’s 2006 Global Compensation Planning Report cover five levels of employees: operations staff, clerical staff, technical staff, managers and senior executives. Data on projected pay is taken from a survey of multinational companies and inflation data is primarily taken from the International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development.

Copies of the report cost $720 and are available from www.mercerhr.com/globalcompensation .

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