In fact, despite continuing economic uncertainty, employees in most countries can expect their pay to increase next year by 1 to 3.5 percentage points above inflation, according to the study by Mercer Human Resource Consulting.
In most countries, pay increases are expected to hover a few percentage points above the annual inflation rate, but there are exceptions. Mercer notes that in Venezuela pay increases are expected to be around 7 percentage points lower than inflation, for example, while in Bulgaria pay is predicted to rise almost 11 percentage points above inflation.
In North America, US employers predict pay increases of 3.9% next year, somewhat better than Canadian employers, who expect a 3.3% increase. Inflation in these countries is anticipated to be 2.3% and 2.5%, respectively.
In Western Europe, the average salary increase is forecast to be highest in Ireland, at 6.4%, although workers in Norway and Belgium can also expect relatively large increases of 4.7% and 4.4%. UK workers are likely to receive increases of around 3.8%, according to Mercer, while Swiss workers will enjoy the lowest pay growth for the region, 2.7%. Overall, inflation is expected to be moderate in EU countries next year (1.5% to 3.8%).
In contrast to Western Europe, pay increases in Eastern Europe are expected to vary considerably in 2003. Salary growth is projected to be as high as 15.2% in Bulgaria and 12.1% in Slovakia, but salary increases in Slovenia are projected to increase just 2.0%. In fact, inflation will outpace pay increases in Slovenia, Russia, and the Ukraine by around 3.2, 2.6, and 1.0 percentage points, respectively, according to Mercer.
Workers in Central and South American countries can generally anticipate large salary increases next year, but not always enough to stay ahead of soaring inflation rates. For example, while average pay raises are predicted to be as high as 15.4% in Venezuela, 13.5% in Honduras, and 12% in Costa Rica – inflation in those countries is projected to be 22.5%, 12.0%, and 11.8% in these countries, respectively. Peru’s projected 4.0% salary increase will likely be the lowest in the region.
As for the Asia-Pacific region, Indonesia expects pay increases of 15.4% and inflation of 10.0%, while Japan forecasts pay increases of 2.7% and inflation of 0.2%, the lowest inflation of any country in Mercer’s study.
Mercer’s Global Compensation Planning Survey Report examines economic, employment, and pay trends in more than 60 countries worldwide. Data on projected pay comes from surveys of large employers, while inflation data is mostly collected from the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD).
Data for Mercer’s 2003 Global Compensation Planning Report covers five levels of employees: operations staff, clerical staff, technical staff, managers, and senior executives. The salary increase figures quoted above relate to the average of all employee categories.