Global pay slowdown hits in 2014
Pay rises across the world are in decline and Australian wage earners are not immune.
The latest pay forecast data from global management consultancy, Hay Group shows that pay in Australia is forecast to grow by 3%, which represents a decline of 1% on last year’s growth rate. This is the slowest growth rate seen since the GFC, showing a sign of cautiousness within the Australian market.
Globally pay is set to increase by 5.2% on average but rises for 2014 are expected to average 0.3% less than last year’s forecasts (5.5%).
Fast-growth markets will see the biggest salary rises. However, high inflation means real income will fall in many countries.
Salaries in Asia are expected to increase by an average of 7%– 0.2% less than the rise in 2013, reflecting slowing but still strong economic forecasts. The highest increases will be seen in Vietnam (11.5%), India (10.9%), Indonesia (10%) and China (8.6%).
Hay Group’s research is based on the salary expectations of more than 22,000 organisations in 71 countries worldwide, representing 15 million employees.
Steve Paola, senior consultant at Hay Group, comments: “This year’s global forecast highlights a significant slowdown of pay rises into the new year, as GDP growth in many parts of the world remains subdued.
“Even where optimistic rises are expected in fast growing markets, high inflation means the economic recovery won’t be felt in the pay packets of employees in many countries.”
Paola adds, “In times of slow-growth, Australian organisations must keep a keen eye on the bottom line to remain competitive – minimising costs and driving productivity. Yet, there is an opportunity for organisations to be creative about how they reward their people – going beyond cash. It’s about spending smarter, not more, and reviewing return on reward spend.
“Securing the commitment of employees by developing clear career management plans, nurturing key talent and creating a buzz around the company’s vision can also play a role in engaging and retaining employees over the long-term.”