It’s on everyone’s mind as the year winds down, the prospect for next year’s raises. And the answer is that they’ll apparently be better than before—just not thanks to their companies.

Salaries, after inflation, are predicted to grow 2.1% globally next year, according to the new Korn Ferry 2020 Salary Forecast. That’s above the 1.0% growth that was projected for 2019. But the increase in wealth isn’t from companies being more generous, it’s because the rate of inflation is declining around much of the world.

That raises some red flags for some. According to experts, relying on inflation to make employees feel wealthier isn’t likely to improve engagement. “You can’t rely on inflation to make people feel good,” says Don Lowman, global leader for Korn Ferry’s Rewards and Benefits practice.

Indeed, salary increases worldwide are expected to be 4.9%, on average, in 2020, a decrease from the 5.1% forecasted for 2019. But inflation is falling considerably faster, to just 2.8% in 2020, down from 4.1% in 2019. The data was drawn from Korn Ferry’s pay database, which contains data for more than 20 million job holders in 25,000 organizations across more than 130 countries.

The highest real-wage growth will come in Asia. Salaries are forecast to grow by 5.3% in 2020. After inflation, real-wage salaries are expected to be 3.1%, up from 2.6% last year. There will be considerable variability across Asian countries, however. In Japan, for example, wages are expected to grow 0.6% after inflation, while Chinese workers may see a 2.0% gain and Indian employees a 5.0% gain.

Much of the rest of the world, including the United States, will see small bumps in real-wage growth. Countries such as the United Kingdom, Australia, France, Germany, and Italy will see real wages increase by 2% or less. Only five nations are expected to have real wages grow by more than 5.0%, and only one country, Egypt, is expected to see real wages increase by more than 6.0%.

To be sure, such averages can hide the fact that workers in jobs that are in demand—such as tech—are likely to get higher raises, while others get less. That can create separate morale issues, experts say. “There are people getting literally zero in their pay while top talent gets 6% or 7%,” says Lowman. “Managers will have to find other ways to get rewards.”

Inflation isn’t a bad place to start as a benchmark for pay, but it shouldn’t be the only consideration, experts say. “We recommend that companies take a broader perspective by defining and agreeing upon their own measures of cost drivers, business strategy, and local trading conditions,” says Benjamin Frost, Korn Ferry’s global general manager for pay. Firms are also increasingly offering career development programs for its workers in lieu of large pay bumps, since development is something many younger workers want and the programs are less costly than across-the-board salary increases. 

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