Real wage increase expected to lag throughout most of Europe
Europe is expected to experience lacklustre growth in real wages in 2018, with the UK placed in the bottom four. The Asia-Pacific region is expected to outperform the rest of the world in wage growth.
Europe sees steady inflation and limited growth
Real salary growth for UK workers is forecast to remain behind most of their European peers. Only employees in Hungary, Poland and Ukraine are anticipated to have lower real salary increases than those in the UK.Although there are early signs of growth in some major European economies, expected real salary increases still lag behind those of a few years ago. Real wage growth in Germany and France is expected to be less than half the rate of 2015 at 1.2 per cent and 0.9 per cent respectively.Despite the lacklustre predictions for 2018, the average rise across the continent is expected to be 1 per cent, and for the first time in five years no European nation is expected to experience a salary decrease. Real-terms pay freezes are pushing Ukraine and Portugal to the bottom of the regional rankings.Russia is forecast to move to the top of the European rankings in 2018. As its economy stabilises and inflation falls, employees in Russia are set to receive a 3.1 per cent real salary increase next year.After seeing the highest real salary increases in Europe in 2017, inflation is expected to move higher in Romania. This will cause the country to see real pay rises of just 0.7 per cent next year, compared to 3.4 per cent in 2017, and fall 46 places in the global rankings. Ireland and Hungary face a similar situation, falling 18 and 21 places respectively.Related stories:
- Europe to spur global economic growth, says IMF
- Women twice as likely to receive lowest pay: Equal Pay Day
- Pay rises subdued as UK employment continues to grow
Asia-Pacific leads the way
Asia-Pacific countries continue to outperform the rest of the world, occupying eight of the top ten spots in the global rankings with above-inflation salary increases across the board. Despite slower economic growth, China is forecast to rank seventh in the world next year and will maintain its ever-present record in the top ten of ECA’s ranking of global real salary increases.Top spot in the region is taken by India, with a 4.9 per cent real salary increase predicted.Americas show improvement
India is only beaten to the global top spot by Argentina, which is forecast to receive an impressive 7.2 per cent real salary increase in 2018.Mr Kilfedder added, “President Macri’s market-friendly policies are expected to bear fruit in Argentina next year, causing inflation to cool and bringing respite to hard-pressed workers after years of low or negative real salary increases.“As a result, Argentina has jumped 22 places in the 2018 global rankings, topping the chart for the highest real salary increase in the world.”In the Americas, average real salary increases are predicted to be 1.6 per cent, slightly higher than in 2017 (1.4 per cent). Employees in Mexico in particular look set to benefit from lower inflation in 2018 to record real-term increases of 0.8 per cent compared to a 1.3 per cent pay cut in 2017. Uplifts for the USA and Canada are set to remain steady, at 0.9 and 1.1 per cent respectively.Africa and Middle East affected by inflation
Despite both expecting to see 10 per cent nominal salary increases next year, Egypt and Nigeria find themselves at the bottom of the global rankings thanks to high inflation, which will likely far outweigh pay rises and cause real decreases of 11.2 and 4.8 per cent respectively. Lower inflation in Ghana will help the country to leap 51 places globally and top the regional rankings for Africa and Middle East, with employees predicted to enjoy a 4.7 per cent real pay hike.The imminent introduction of VAT in the countries of the Gulf Cooperation Council has raised inflation forecasts. Saudi Arabia and Qatar are particularly affected with both anticipated to experience real salary decreases as a result, dropping from among the highest ranked nations in the region in 2017 to the lowest in 2018.For a full list of real and nominal wage increases please visit the ECA website. For any other additional information visit www.eca-international.com.For related news and features, visit our HR section. Look out for the launch of 2018's Relocate Awards, entries open in January. Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory©2024 Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.