Korn Ferry Hay Group 2016 Salary Forecast: Wages Expected to Rise Globally, With Biggest Pay Increase in Three Years

  • Global salary rise highest in three years
  • Real wages up 2.5%, as pay rises combine with low inflation
  • Despite economic slowdown, Asian workers to see biggest real wage rise, with China forecast to see third highest real wage increase globally

This year's forecast for 2016 shows that for the majority of countries, real wage increases in 2016 are set to be the highest in three years. Workers globally will see an average real pay increase of 2.5% - as increases combine with historically low inflation to leave employees better off.

LOS ANGELES--()--A forecast issued today by Korn Ferry (NYSE:KFY), the preeminent global people and organizational advisory firm, reveals that workers around the world are expected see real wage increases of 2.5% – the highest in three years – as pay increases combine with historically low inflation to leave employees better off.

Forecast remains positive in Europe

According to the Korn Ferry Hay Group forecast, workers across Europe are set to see an average salary increase of 2.8% in 2016 and, with inflation at 0.5%, will see real wages rise by 2.3%. Fuelled by a low inflation environment, those in Western Europe will see a 2% increase in real wages compared to a 2.9% increase in Eastern Europe.

The outlook is positive in the UK, France and Germany. While salary rises will stay at 2.5% in the UK (the same as the last two years), low inflation means that real wages are to increase by 2.3% in 2016 – above the Western European average. Workers in France and Germany are also forecast to see real wage rises of 1.7% and 2.7%, respectively. The picture is similar in Greece, where, despite economic issues, salaries are set to increase 2% (compared to 1.3% last year) with deflation leading to real wage rises of 3.4% expected in 2016.

Two outlier countries are excluded from the regional averages, due to specific political issues causing high inflation which impacts real wage increases. Workers in Ukraine are forecast to see the biggest wage rises in Europe (11.5%), but, due to high inflation (48.3%), real wages are set to drastically reduce by 36.8%. The outlook is similar in Russia as the impact of economic sanctions and falling oil prices hit the economy. Despite an average salary increase of 7%, with inflation at 14.5%, real wages are set to fall by 7.5%. This is significantly more than the 0.7% decrease in real wages seen last year.

Philip Spriet, Global Managing Director for Productized Services at Hay Group said, “This year’s global salary forecast shows that, for the majority of countries, real wage increases in 2016 are set to be the highest in three years. Differing macro-economic conditions means there are stark variations globally, but overall decent pay increases, coupled with extremely low (and in some cases, zero) inflation, mean that the outlook is positive for workers.”

Highest real wage growth in Asia

In Asia, salaries are forecast to increase by 6.4% – down 0.4% from last year. However, real wages are expected to rise by 4.2% – the highest globally. The largest real wage increases are forecast in Vietnam (7.3%), China (6.3%) and Thailand (6.1%). In fact, despite China’s economic slowdown, coupled with plummeting stock markets and reduced exports, workers in the country are set to see an 8% salary increase in 2016 as employment rates continue to grow due to the increasing need for skilled workers and the sustained rise of the burgeoning middle class.

Seeing the benefit of being a part of the fastest growing major economy, Indian workers are also forecast to see the highest real wage increase they have seen in the last three years, at 4.7% compared to 2.1% last year and 0.2% in 2014.

Buoyant labor market in North America

This upward trend can also be seen in North America, where the labor market is buoyant. In the United States, with low inflation (0.3%), employees will experience real income growth of 2.7%. Canadian workers will meanwhile see salaries increase by 2.6% and experience real wage growth of 1.3%. Across the continent, salaries will increase by 2.8% – the same as last year.

Economic turmoil impacting workers in Latin America

Workers in Latin America are forecast to see the largest headline salary rises in 2016 at 11.4%. However, due to high inflation in the region (12.8%), they are expected to see real wage cuts of 1.4%. This is especially evident in Argentina and Brazil, as despite salary increases of 31% and 7.7%, respectively, workers in Argentina will only see a 3.6% increase in wages, and those in Brazil will actually see a real pay cut of 1.2% in 2016.

Ultimately, Venezuela is set to suffer the most significant cut in real income across the globe. Salary increases are high at 70%, but when predicted inflation is factored in (122.6%), employees can expect real wage cuts of 52.6%.

Strong growth in the Middle East and Africa

2016 looks positive for workers in the Middle East and Africa. Despite plunging oil prices and economic and political chaos throughout the region, salaries in the Middle East and Africa are forecast to rise by 5.3% and 6.5%, respectively. Relatively low inflation means that workers are set to see real wage increases of 3.8% and 1.6%.

In the Middle East, Lebanon (11.5%) and Jordan (5.3%) are forecast to see the highest real wage increases, with the UAE set to see the slowest real wage growth (0.9%) – down from 2.8% last year. High inflation in Egypt means it is the only country in the region set to see a cut in real wages (0.4%).

Philip Spriet concludes: “Asia continues to drive growth in wages globally as companies look set to increase wages. However, the global labor market is in flux as the aging workforce in advanced economies begins to take hold. In emerging economies, upskilling workers is crucial for companies to maintain competitive advantage, and those skilled employees can expect to see wages rise as talent shortages in certain regions drives salaries up.”

Average real wages increases are based on 73 countries in Hay Group’s database – excluding Ukraine and Venezuela, where political turmoil and high inflation have led to real wage decreases of 36.8% and 52.6%.

Please note: This study should be credited to “Korn Ferry Hay Group,” and not “Hay” or “Hays,” which are separate and unrelated organizations.

About the study

The data was drawn from Hay Group PayNet which contains data for more than 20 million job holders in 24,000 organizations across more than 110 countries.

It shows predicted salary increases, as forecasted by global HR departments, for 2016 and compares them to predictions made at this time last year regarding 2015. It also compares them to inflation predictions for 2016 from the Economist Intelligence Unit.

                     
Region   Country  

2016
Salary
Forecast

 

2016
inflation
forecast1

 

Salary
Increase vs.
inflation
(‘Real’
increase)

 

2015
Salary
Forecast

Africa   Algeria   6.0%   5.1%   0.9%   6.6%
Latin America   Argentina   31.0%   27.4%   3.6%   32.5%
Pacific   Australia   2.5%   1.9%   0.6%   3.0%
Europe   Austria   3.0%   1.0%   2.0%   2.7%
Middle East   Bahrain   4.5%   1.8%   2.7%   5.0%
Europe   Belgium   1.7%   0.5%   1.2%   2.0%
Africa   Botswana   6.0%   3.2%   2.8%   n/a
Latin America   Brazil   7.7%   8.9%   -1.2%   6.1%
Europe   Bulgaria   4.0%   0.1%   3.9%   4.2%
North America   Canada   2.6%   1.3%   1.3%   2.6%
Latin America   Chile   5.0%   4.4%   0.6%   5.0%
Asia   China   8.0%   1.7%   6.3%   8.0%
Latin America   Colombia   4.7%   4.4%   0.3%   3.5%
Latin America   Costa Rica   5.5%   1.4%   4.1%   6.0%
Europe   Cyprus   1.8%   -0.5%   2.3%   0.0%
Europe  

Czech

Republic

  2.0%   0.5%   1.5%   2.0%
Europe   Denmark   2.2%   0.6%   1.6%   2.5%
Latin America  

Dominican

Republic

  6.2%   0.8%   5.4%   6.0%
Latin America   Ecuador   5.3%   4.2%   1.1%   n/a
Africa   Egypt   10.0%   10.4%   -0.4%   10.0%
Latin America   El Salvador   3.9%   0.2%   3.7%   4.1%
Europe   Estonia   3.0%   0.1%   2.9%   2.8%
Europe   Finland   1.0%   0.0%   1.0%   1.0%
Europe   France   1.9%   0.2%   1.7%   2.0%
Europe   Germany   2.9%   0.2%   2.7%   2.8%
Europe   Greece   2.0%   -1.4%   3.4%   1.3%
Latin America   Guatemala   5.1%   2.3%   2.8%   5.4%
Latin America   Honduras   6.4%   4.2%   2.2%   5.5%
Asia   Hong Kong   4.5%   3.1%   1.4%   4.0%
Europe   Hungary   3.0%   0.6%   2.4%   3.0%
Asia   India   10.3%   5.6%   4.7%   10.5%
Asia   Indonesia   9.1%   6.7%   2.4%   10.0%
Europe   Ireland   2.0%   -0.2%   2.2%   1.4%
Europe   Italy   2.5%   0.4%   2.1%   2.7%
Asia   Japan   2.0%   1.0%   1.0%   2.0%
Middle East   Jordan   5.0%   -0.3%   5.3%   6.0%
Europe   Kazakhstan   7.4%   5.8%   1.6%   7.8%
Asia   Korea   5.0%   0.7%   4.3%   5.0%
Middle East   Kuwait   5.0%   3.4%   1.6%   5.0%
Europe   Latvia   3.7%   0.7%   3.0%   2.4%
Middle East   Lebanon   9.3%   -2.2%   11.5%   6.7%
Europe   Lithuania   4.0%   -1.0%   5.0%   3.3%
Europe   Luxembourg   2.9%   0.1%   2.8%   3.2%
Asia   Malaysia   6.0%   2.1%   3.9%   6.4%
Latin America   Mexico   4.6%   2.7%   1.9%   4.8%
Africa   Morocco   3.6%   1.5%   2.1%   4.5%
Europe   Netherlands   2.5%   0.3%   2.2%   2.3%
Pacific   New Zealand   3.0%   0.7%   2.3%   3.0%
Latin America   Nicaragua   6.0%   4.4%   1.6%   6.1%
Europe   Norway   2.6%   1.7%   0.9%   3.2%
Middle East   Oman   4.0%   0.9%   3.1%   5.5%
Latin America   Panama   4.9%   0.7%   4.2%   5.4%
Latin America   Peru   5.0%   3.6%   1.4%   5.5%
Asia   Philippines   7.0%   1.8%   5.2%   7.5%
Europe   Poland   2.6%   -0.8%   3.4%   3.0%
Europe   Portugal   1.3%   0.9%   0.4%   1.0%
Middle East   Qatar   5.0%   2.1%   2.9%   5.0%
Europe   Romania   4.8%   -0.6%   5.4%   4.6%
Europe  

Russian

Federation

  7.0%   14.5%   -7.5%   6.8%
Middle East   Saudi Arabia   5.0%   2.4%   2.6%   5.0%
Asia   Singapore   4.0%   0.3%   3.7%   4.4%
Europe   Slovakia   2.5%   -0.3%   2.8%   2.0%
Africa   South Africa   6.9%   4.8%   2.1%   6.2%
Europe   Spain   1.8%   -0.4%   2.2%   1.1%
Europe   Sweden   2.4%   0.1%   2.3%   2.3%
Europe   Switzerland   1.4%   -1.1%   2.5%   1.4%
Asia   Thailand   6.0%   -0.1%   6.1%   6.0%
Africa   Tunisia   6.8%   4.9%   1.9%   7.0%
Europe   Turkey   8.0%   7.4%   0.6%   9.0%
Europe   Ukraine   11.5%   48.3%   -36.8%   6.8%
Middle East  

United Arab

Emirates

  5.0%   4.1%   0.9%   5.0%
Europe   United Kingdom   2.5%   0.2%   2.3%   2.5%
North America  

United States

of America

  3.0%   0.3%   2.7%   3.0%
Latin America   Venezuela   70.0%   122.6%   -52.6%   40.3%
Asia   Vietnam   8.6%   1.3%   7.3%   11.4%
         

About Korn Ferry

Korn Ferry is the preeminent global people and organizational advisory firm. We help leaders, organizations and societies succeed by releasing the full power and potential of people. Our nearly 7,000 colleagues deliver services through Korn Ferry and our Hay Group and Futurestep divisions. Visit kornferry.com for more information.

1 Inflation rates, Economist Intelligence Unit

Contacts

For Korn Ferry Hay Group
Evan Stisser, 212-221-4616
evan@blissintegrated.com

Release Summary

A new Korn Ferry forecast of global salary levels reveals that in 2016 workers around the world can expect real wage increases of 2.5% – the highest level in three years.

$Cashtags

Contacts

For Korn Ferry Hay Group
Evan Stisser, 212-221-4616
evan@blissintegrated.com