Support through your toughest HR challenges: A network of 285,000 HR professionals.
Shawn Premer shows how doing the right thing for employees leads to positive business results.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
North America lags globally in ‘real’ pay raises
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
Workers around the world are expected to see "real" (inflation-adjusted) wage increases of 2.3 percent next year, down slightly from 2.7 percent for 2016. U.S. and Canadian workers will see even more-modest wage gains tempered by low inflation. But the rapid rise in emerging market pay over recent years is helping dissuade U.S. corporations from moving jobs to other countries.
North America (the U.S. and Canada combined) will see slower salary increases than other regions, with only a 1.4 percent real increase, according to regional and country-specific
global pay findings released on Dec. 6 by the Hay Group division of consultancy Korn Ferry.
The data was drawn from Hay Group's client database, which contains pay information for more than 20 million job holders across more than 110 countries. Among the findings:
"There are still positive real wage gains across the globe," wrote Benjamin Frost, Korn Ferry Hay Group's London-based global manager for pay, in an analysis of the findings. "In addition to predicted salary increases, inflation is relatively low in most countries, which has a positive impact on real wages." However, "the global labor market is in flux as slower economic growth in mature economies keeps a check on pay raises."
Diminishing Wage Gaps and Offshoring U.S. Jobs
As regards the hot-button political issue of U.S. companies moving jobs to China and other low-wage nations, Frost noted in an e-mail to
SHRM Online that "Although other countries, especially many in Asia, have lower wage costs than the U.S., salaries in those regions are rising much quicker so the gap is closing fast." The findings show, for instance, "a sharp decline in pay rises in China, reflecting the fact that there is limited room to keep increasing pay by 8-10 percent a year and remain competitive. So the case for sending jobs overseas may become less clear-cut from a financial perspective."
[SHRM members-only toolkit:
Obtaining and Using Relevant Salary Survey Data]
High Wage Growth in Asia, Except China
In Asia, salaries are forecast to increase by 6.1 percent next year, down 0.3 percent from raises received in 2016. Real wages are expected to rise by 4.3 percent, the highest globally.
The regional exception is by far the largest economy—China—where real wages increases are down nearly 2.5 percent, from 6.3 percent in 2016 to 4 percent in 2017, reflecting lower growth predictions for the year ahead.
"Asia continues to drive growth in wages globally as companies look to increase pay across the board," Frost said. "In emerging economies, upskilling workers is crucial for companies to maintain a competitive advantage—and those skilled employees can expect to see wages rise as talent shortages in certain regions drive salaries up."
Inflation Roils Latin America
Workers in Latin America are forecast to see the largest salary rises in 2017 at 7 percent. Due to high inflation in the region (5.9 percent), they should see real wage increases of only 1.1 percent. In Brazil, the region's largest economy, the expected salary increase is 8.8 percent, but with 8.4 percent inflation the real increase is 0.4 percent.
Eastern Europe Faring Better than Western Europe
Workers in Eastern Europe are set to see an average salary increase of 5.1 percent in 2017, and with inflation at 3 percent, they will see real wages rise by 2.1 percent.
With inflation much lower in Western Europe, workers there will receive lower pay raises, with an average increase of 2.1 percent. With an average inflation rate of 0.4 percent, the real increase is 1.7 percent.
Despite the turmoil following the Brexit decision, the United Kingdom is faring pretty well, with predicted raises staying at 2.5 percent (the same as the last three years), the findings indicate. Adjusted for inflation, real wages will increase by 1.9 percent in 2017, which is slightly higher than the Western European average.
Pacific Region Increases Middle of the Pack
Wages throughout the Pacific region are forecast to show 2.8 percent growth, with 1.8 growth when adjusted for inflation. Australia will see a 3 percent growth, a 1.4 percent inflation rate and a 1.6 percent real wage increase.
Africa Sees Slow Real Wage Growth
Although salaries will increase 6.4 percent in Africa, high inflation means the real increase is only 0.7 percent.
When Should Pay Go Global?,
SHRM Online Compensation, April 2016
Was this article useful? SHRM offers thousands of tools, templates and other exclusive member benefits, including compliance updates, sample policies, HR expert advice, education discounts, a growing online member community and much more.
Join/Renew Now and let SHRM help you work smarter.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Choose from dozens of free webcasts on the most timely HR topics.
SHRM’s HR Vendor Directory contains over 3,200 companies