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Companies in the South Africa are forecasting 6,9% pay rises for staff in 2016, according to the latest Salary Trends survey by ECA International.
However, once inflation is taken into account “real” salaries will rise by only 1% on average next year. This is lower than the 2,2% real wage increases seen in 2015 due to the rising inflation rates forecast next year at 5,9%, up from 4,8% in 2015.
ECA’s Salary Trends Survey reports current and projected salary increases for local employees. It provides information on “real” pay rises by factoring in inflation rates. This year, it is based on information collected from 336 multinational companies across 70 countries and regions.
According to company predictions from around the globe, wages will rise 5,1% on average in 2016, slightly up on this year’s 5% average. In terms of “real” salary increases (once inflation has been factored in), the global average is forecasted to be 1,7%, which is similar to last year’s average of 1,5%.
Companies in Venezuela are forecasting the survey’s highest nominal pay rises in 2016. Employers there are predicting 60% pay rises for staff next year on average. However, once inflation of over 204% has been factored in, employees will actually experience the largest global decrease in spending power in 2016.
The lowest forecasted nominal salary increase is expected in Greece in 2016, companies here anticipate a 1,5% increase compared with Europe’s 2,8% average. There are no particular surprises with Greece’s inclusion here with their well-publicised sovereign debt crisis. In 2016, real wage rises are expected to average 1,4% in Europe, which is actually a decrease from 2015’s 2% average increases. Romania is forecasted to have the largest real salary increase in Europe, ranked fifth in the global rankings with an expected increase of 4,7%. Although the forecast of 0,2% deflation for 2016 is a concern, the country continues to reap dividends from the economic openness provided by previous reforms, and notable progress has been made with curtailing political corruption.
Forecasts for 2016 salary increases in Ukraine fall below the expected rate of inflation; a real-terms wage decrease is therefore predicted, at -4,2%. The Ukrainian revolution and subsequent Russian invasion created economic turmoil and forced the Ukrainian government to greatly devalue the hryvnia. The weaker currency immediately inflated import prices and added to product shortages, resulting in a rapid inflation-rate rise to more than 50% in 2015. Although likely to remain elevated, inflation is nevertheless expected to decline significantly in 2016, reducing upward pressure on wages.
In mainland China, companies are planning to award 8% salary increases next year. Even after inflation, staff in China will be the second best off globally in 2016: they can expect to see increases of 6,2% in real terms. Despite its recent slowdown, China remains among the fastest-growing economies in the world with well-developed supply chains and cheap labour making it the primary destination for foreign investment in the developing world.
On average, salaries in Asia are expected to increase by 6,8% in 2016 with the largest uplifts being given in Pakistan and the lowest in Japan. After a short period of inflation in Japan, the IMF is predicting a renewal of the trend towards deflation throughout 2016. It appears that the government’s efforts to raise wages in recent years, to encourage spending, may not be sustainable and Japan should continue to see small salary increases.
In terms of real salary increases, it is staff in Vietnam that will experience the highest regional and global real wage increase in 2016 of 7%. Real wage rises in Asia will average 3,1% in 2016 – higher than all other regions surveyed.
In the US and Canada, companies are predicting 3% wage increases – the same as this year’s uplifts. Staff in Australia can expect to receive 3,5% uplifts in 2016 while employees in the Middle East are set to see wages rise 5% on average.