Asia and Latin America expected to see biggest salary rises in 2014

by Ray Clancy on November 25, 2013

Higher salaries are often regarded by British expats as one reason for choosing to live and work abroad and a new study suggests that they can earn more overseas.

The latest Salary Trends survey by ECA International says that employees in the UK can expect to see their salaries increase by an average of 3% next year while Asia and Latin America will see the biggest pay packet rises.

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Survey shows UK salaries expected to increase by an average of 3% next year while Asia and Latin America will see the biggest pay packet rises.

But the study by one of the world’s leading providers of knowledge, information and technology for the management and assignment of employees around the world, points out that inflation needs to be taken into account.

For example, next year will be the fourth year in a row where companies have reported 3% wage increases in the UK, but Steven Kilfedder, the firm’s cost of living and remuneration services said that if inflation is 2.3% as International Monetary Fund predictions indicate, employees in the UK will experience increases of just under 1% in real terms.

‘While this would be higher than they’ve seen in recent years these would be the second lowest real wage increases in Europe after Finland, and are among the lowest of all the countries we surveyed,’ he explained.

The highest pay increases in Europe are being forecast by companies in Russia and Ukraine. Employees there can expect to see 8% salary hikes next year. However, the average pay rise across Europe is anticipated to be 3.5%.

Companies in Switzerland and Greece are forecasting the lowest wage increases in Europe. Employees there can expect salary rises of around 2%. However, despite these low increases little, if any, of this is likely to be eroded by inflation in contrast to many of their peers who will be worse off than them in real terms.

Overall the data, which is based on information collected from 316 multinational companies across 64 countries and regions, wages will rise almost 6% in 2014 on average, with most employers setting increases at the same or very similar levels to this year.

Asia and Latin America are the regions that will see the highest wage increases, with companies there forecasting rises of approximately 10% and 11% respectively. However, inflation in those regions is also expected to be higher. In Latin America, for example, increases after inflation will average 1%, the lowest globally.

The highest pay rises are being forecast by companies in Venezuela. Employers there are predicting 26% pay rises for staff next year on average. However, that figure trails well behind inflation forecasts. The IMF is predicting 38% inflation in Venezuela next year, leaving employees there facing a spending power reduction of 12% in real terms.

While employees in Argentina are set to see the second highest salary increases next year they are not likely to experience much of an uplift in real terms as most independent analysts are putting inflation there at around 25% which is well above the official 11.4% figure.

Companies operating in Mainland China are predicting salary increases of 8% in 2014. Allowing for inflation, Chinese workers will see a 5% increase in real terms, the highest in Asia and among the highest worldwide.

‘The ongoing need to attract and retain skilled workers who are in short supply in China, is driving up wage increments there to among the highest levels in our survey. Over time, this trend may significantly narrow the traditional salary gap between China and Singapore,’ said Kilfedder.

‘Our recent global research on buying power around the world also suggested that Chinese executives could even be better off than their United States counterparts by 2017 if the current trends continue. At present, salaries in China are increasing at more than double the pace of salaries in the United States,’ he added.

In both the US and Canada, companies are predicting 3% wage increases, while those in Europe are forecasting 3.5% rises next year. Companies in Australia are forecasting 4% increases for their staff in 2014 while employees in the Middle East are set to see an average uplift of 4.8%. Companies in South Africa are forecasting 7% wage rises for their staff.

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