Korn Ferry

Korn Ferry 2018 Salary Forecast: Smaller Real Wage Increases Across Most Parts of the World

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- Adjusted for Inflation, Real Wages Up Only an Average of 1.5 Percent –
- U.S. Real Wage Growth Half of What it Was Last Year -
- U.K., UAE and Egypt See Declines in Real Wages-
- Asia Sees Highest Real Wage Growth, Though at Slower Pace Than Last Year -

LOS ANGELES, Dec.12, 2017 – A forecast issued today by the Hay Group division of Korn Ferry (NYSE: KFY) reveals that, adjusted for inflation, employees around the world are expected to see real wage increases of only an average of 1.5 percent, down from 2017’s prediction of 2.3 percent and 2016’s prediction of 2.5 percent.

“With inflation rising in most parts of the world, we’re seeing a cut in real wage increases across the globe,” said Bob Wesselkamper, Korn Ferry Global Head of Rewards and Benefits Solutions. “The percentage of salary increase or decrease will vary by role, industry, country and region, but one thing is clear, on average, employees are not seeing the same real pay growth they did even one year ago.”

Australasia Sees the Lowest Real Salary Increase
Wages in Australasia are forecast to grow by 2.5 percent, which is an increase of 0.7 percent in real wages when adjusted for inflation. Australia will see a 2.5 percent top-line growth, a 2.1 percent inflation rate, and a 0.4 percent real wage increase. In New Zealand, a 2.5 percent salary increase is forecast, with 1.5 percent inflation, for a 1 percent real salary increase.

North America Lagging
In the United States, an average 3 percent pay increase is predicted, which is the same as last year. Adjusted for the expected 2 percent inflation rate in 2018, the real wage increase is 1 percent – down from last year’s 1.9 percent. Canadian workers will see salaries increase by 2.6 percent, and with inflation at 1.7 percent, will experience real wage growth of 0.9 percent.

Eastern Europe Faring Better than Western Europe
According to the Korn Ferry forecast, employees in Eastern Europe are set to see an average salary increase of 6 percent in 2018. However, after taking inflation into account, real wages will only rise by 1.4 percent, which is down from 2.1 percent last year. In Western Europe, workers are expected to see lower wage increases, with an average increase of 2.3 percent, and inflation-adjusted real wage increases of 0.9 percent.

With the continued uncertainty following the Brexit decision, wages in the United Kingdom are up just 2 percent. Combined with a 2.5 percent inflation rate, real wages are expected to decrease by -0.5 percent. This is in contrast to 2017, when inflation-adjusted wages in the U.K. were up 1.9 percent. Employees in two of Europe’s largest economies, France and Germany, are forecasted to see real wage rises of 0.7 percent and 0.8 percent respectively.

Smaller Increases in the Middle East
In the Middle East, wages are expected to increase by 3.8 percent, compared to 4.5 percent last year. Inflation-adjusted wage increases are predicted to be 0.9 percent, compared to 2.5 percent last year. In the UAE, inflation of 4.6 percent combined with pay increases of only 4.1 percent, means that real wages will fall by -0.5 percent.

Jordan and Lebanon saw the biggest drops in the region, with Jordan predicted to have a 1.6 percent real wage growth, down from 6.3 percent last year, and Lebanon predicted at 1.8 percent compared to 6.1 percent last year.

Inflation Tempers Salary Growth in Africa
Although top-line salaries will increase by 8.5 percent in Africa, high inflation means the real increase is only 1.7 percent, which is up from 0.7 percent last year. In Egypt, top-line salaries will increase by 15 percent, but an 18.8 percent inflation rate means employees will see a cut in real wages of -3.8 percent.

Latin America Sees Second-Highest Real Wage Growth
Employees in Latin America are forecasted to see a 6.2 percent increase in wages, and with inflation slowing down in the region, real wage increases will reach 2.1 percent, up from last year’s 1.1 percent. In Colombia, inflation is expected to be 2.7 percent for 2018. With a salary increase projected at 5.3 percent, this puts real wages for Colombia up 2.6 percent. In Brazil, the expected salary increase is 7.3 percent, and with 4 percent inflation, the real increase is expected to reach 3.3 percent.

Highest real wage growth in Asia – Though Increases Slowed from Previous Year
In Asia, salaries are forecast to increase by 5.4 percent – down from 6.1 percent last year. Inflation-adjusted real wage increases are expected to be 2.8 percent – the highest globally, but down from 4.3 percent last year. China remained consistent with real wage increases predicted at 4.2 percent for 2018, compared to 4 percent last year. Most countries in this region saw a drop in year-over-year real wage prediction increases – including Vietnam’s forecast of 4.6 percent, down from 7.2 percent, Singapore at 2.3 percent, down from 4.7 percent, and Japan at 1.6 percent, down from 2.1 percent.

“Slower economic growth in mature economies keeps a check on pay raises,” said Wesselkamper. “In emerging economies, upskilling workers is crucial for companies to maintain a competitive advantage – and those skilled employees can expect to see wages rise as talent shortages in certain regions drive salaries upward.”

Korn Ferry pay experts recommend taking a holistic approach when determining pay.

“While inflation indices are a solid benchmark for reviewing market trends in pay, 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,” said Benjamin Frost, Korn Ferry’s Global General Manager – Pay. “Compensation programs need to be regularly reviewed to make sure they align with changing business and market conditions.”

About the study
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 110 countries.

It shows predicted salary increases, as forecasted by global HR departments, for 2018 and compares them to predictions made at this time last year regarding 2017. It also compares them to 2018 inflation data from the Economist Intelligence Unit.

Our interactive site with more detailed figures, and downloadable infographic with headline figures for each country are here:

Editor’s Note: Global averages exclude Venezuela, Argentina and Ukraine, and regional averages exclude Venezuela due to particularly high inflation.

Region

Country

2018 salary forecast

2018 inflation forecast

2018 "real" salary increase

2017 salary forecast

2017 "real" salary increase

East Europe

Albania

2.6%

2.8%

-0.2%

-

-

Africa

Algeria

6.5%

5.7%

0.8%

5.6%

-1.1%

Latin America

Argentina

21.9%

14.6%

7.3%

28.5%

-12.5%

East Europe

Armenia

5.3%

3.3%

2.0%

-

-

Pacific

Australia

2.5%

2.1%

0.4%

3.0%

1.6%

West Europe

Austria

2.5%

1.7%

0.8%

2.0%

1.1%

East Europe

Azerbaijan

10.0%

5.2%

4.8%

-

-

Middle East

Bahrain

4.0%

2.1%

1.9%

5.0%

1.8%

East Europe

Belarus

10.2%

10.5%

-0.3%

-

-

West Europe

Belgium

3.0%

1.7%

1.3%

2.8%

1.0%

Latin America

Bolivia

6.8%

4.4%

2.4%

-

-

Africa

Botswana

4.7%

4.0%

0.7%

5.4%

2.0%

Latin America

Brazil

7.3%

4.0%

3.3%

8.8%

0.4%

East Europe

Bulgaria

3.8%

2.0%

1.8%

4.0%

4.7%

North America

Canada

2.6%

1.7%

0.9%

2.5%

0.9%

Latin America

Chile

4.8%

2.7%

2.1%

4.9%

1.0%

Asia

China

6.0%

1.8%

4.2%

6.1%

4.0%

Latin America

Colombia

5.3%

2.7%

2.6%

6.8%

-0.8%

Latin America

Costa Rica

3.7%

3.3%

0.4%

5.0%

4.6%

East Europe

Croatia

2.8%

1.8%

1.0%

-

-

West Europe

Cyprus

3.7%

1.3%

2.4%

2.0%

3.1%

East Europe

Czech Republic

3.9%

2.0%

1.9%

2.8%

2.2%

West Europe

Denmark

2.0%

1.9%

0.1%

2.1%

1.7%

Latin America

Dominican Republic

5.1%

3.8%

1.3%

5.5%

3.9%

Latin America

Ecuador

5.0%

0.6%

4.4%

5.0%

3.3%

Africa

Egypt

15.0%

18.8%

-3.8%

9.8%

-3.0%

Latin America

El Salvador

3.7%

1.5%

2.2%

3.4%

2.7%

East Europe

Estonia

3.5%

3.0%

0.5%

3.3%

3.1%

West Europe

Finland

1.0%

1.2%

-0.2%

1.0%

0.6%

West Europe

France

2.0%

1.3%

0.7%

1.8%

1.5%

East Europe

Georgia

5.7%

3.1%

2.6%

-

-

West Europe

Germany

2.4%

1.6%

0.8%

2.5%

2.2%

Africa

Ghana

15.6%

9.7%

5.9%

-

-

West Europe

Greece

2.0%

1.0%

1.0%

2.0%

2.1%

Latin America

Guatemala

4.7%

4.7%

-0.0%

5.0%

0.6%

Latin America

Honduras

5.1%

4.1%

1.0%

6.0%

3.1%

Asia

Hong Kong

4.0%

2.3%

1.7%

4.2%

1.5%

East Europe

Hungary

4.6%

2.9%

1.7%

3.0%

2.9%

Asia

India

9.0%

4.3%

4.7%

10.0%

4.8%

Asia

Indonesia

8.0%

4.6%

3.4%

8.6%

4.9%

Middle East

Iraq

3.0%

2.0%

1.0%

-

-

West Europe

Ireland

2.3%

0.3%

2.0%

2.0%

2.0%

West Europe

Italy

2.7%

0.9%

1.8%

2.6%

2.6%

Asia

Japan

2.0%

0.4%

1.6%

2.0%

2.1%

Middle East

Jordan

4.0%

2.4%

1.6%

5.5%

6.3%

East Europe

Kazakhstan

9.0%

6.2%

2.8%

8.6%

-5.8%

Africa

Kenya

7.5%

6.5%

1.0%

-

-

Asia

Korea

4.5%

1.7%

2.8%

5.0%

4.1%

Middle East

Kuwait

4.3%

3.6%

0.7%

4.1%

0.8%

East Europe

Latvia

4.0%

3.0%

1.0%

4.0%

4.4%

Middle East

Lebanon

5.0%

3.2%

1.8%

5.1%

6.1%

East Europe

Lithuania

5.0%

2.8%

2.2%

4.3%

3.8%

West Europe

Luxembourg

2.6%

1.6%

1.0%

2.8%

2.9%

Asia

Malaysia

6.0%

2.5%

3.5%

5.8%

3.9%

Africa

Mauritius

4.2%

1.3%

2.9%

-

-

Latin America

Mexico

4.6%

3.9%

0.7%

4.6%

1.9%

Africa

Morocco

3.8%

1.2%

2.6%

3.5%

1.8%

Africa

Mozambique

10.0%

6.5%

3.5%

-

-

Africa

Namibia

7.0%

5.8%

1.2%

-

-

West Europe

Netherlands

2.6%

1.4%

1.2%

2.5%

2.3%

Pacific

New Zealand

2.5%

1.5%

1.0%

2.5%

1.9%

Latin America

Nicaragua

6.6%

4.5%

2.1%

5.8%

2.0%

Africa

Nigeria

10.8%

13.9%

-3.2%

-

-

West Europe

Norway

2.5%

1.8%

0.7%

2.0%

-1.5%

Middle East

Oman

3.0%

2.2%

0.8%

3.0%

1.8%

Latin America

Panama

3.0%

1.4%

1.6%

4.0%

3.2%

Asia

Papua New Guinea

4.0%

6.6%

-2.6%

-

-

Latin America

Peru

4.3%

2.8%

1.5%

5.0%

1.6%

Asia

Philippines

5.0%

2.2%

2.8%

6.0%

4.3%

East Europe

Poland

3.5%

2.2%

1.3%

3.0%

3.8%

West Europe

Portugal

2.0%

1.3%

0.7%

2.0%

1.3%

Middle East

Qatar

3.7%

2.6%

1.1%

5.0%

2.1%

East Europe

Romania

5.0%

2.5%

2.5%

4.3%

5.7%

East Europe

Russian Federation

7.0%

4.0%

3.0%

7.0%

-0.1%

Middle East

Saudi Arabia

3.2%

3.1%

0.1%

5.0%

0.8%

East Europe

Serbia

4.8%

2.7%

2.1%

4.1%

3.0%

Asia

Singapore

3.7%

1.4%

2.3%

4.0%

4.7%

East Europe

Slovakia

3.0%

1.7%

1.3%

2.6%

3.0%

Africa

South Africa

7.0%

5.4%

1.6%

7.0%

0.5%

West Europe

Spain

2.0%

1.0%

1.0%

1.9%

2.3%

West Europe

Sweden

2.0%

1.8%

0.2%

2.3%

1.5%

West Europe

Switzerland

1.7%

0.6%

1.1%

1.5%

1.8%

Asia

Taiwan

4.0%

0.7%

3.3%

-

-

Africa

Tanzania

7.9%

5.2%

2.7%

-

-

Asia

Thailand

5.5%

1.0%

4.5%

5.8%

5.6%

Africa

Tunisia

7.1%

4.9%

2.2%

7.3%

3.8%

East Europe

Turkey

9.0%

8.0%

1.0%

8.9%

1.2%

Africa

Uganda

8.0%

5.5%

2.5%

-

-

East Europe

Ukraine

15.0%

10.6%

4.4%

11.3%

-1.9%

Middle East

United Arab Emirates

4.1%

4.6%

-0.5%

3.0%

0.5%

West Europe

United Kingdom

2.0%

2.5%

-0.5%

2.5%

1.9%

North America

United States of America

3.0%

2.0%

1.0%

3.0%

1.9%

Latin America

Uruguay

7.9%

6.8%

1.1%

-

-

East Europe

Uzbekistan

7.3%

15.0%

-7.7%

-

-

Latin America

Venezuela

83.0%

1104.2%

-1021.2%

110.9%

-373.9%

Asia

Vietnam

8.6%

4.0%

4.6%

10.0%

7.2%

Africa

Zambia

12.3%

6.9%

5.4%

-

-

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 more than 7,000 colleagues deliver services through Korn Ferry and our Hay Group and Futurestep divisions.

 

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