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Inflation Leading to Higher Real-Wage Increase Across the Globe

While salary increases are expected across the globe in 2020, slowing inflation will mean an increase in real-wage salary growth as well.

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Korn Ferry’s latest forecast predicts salaries will grow at a rate of 4.9% globally in 2020. With a global inflation rate prediction of approximately 2.8%, that puts the real-wage salary increase prediction at 2.1%. In 2019, the salary growth rate was 5.1%, with global inflation at 4.1%, amounting to 2019 real-wage salary increases of 1% across the globe.

“There is good news for workers in these numbers given real-wage growth is projected to be higher than 2019,” said Don Lowman, Korn Ferry Global Leader, Rewards and Benefits. “But the lower rate of inflation embedded in the numbers may also foreshadow expectations of a stalling economy in several key countries, which could in turn lead to higher rates of unemployment.”

Slower Inflation Rate Boosts North America Real Wages Slightly
In North America, the average salary growth is predicted to be 2.8% in 2020, which is the same as 2019. When adjusted for inflation, the real-wage growth is expected to be 1.1%, up from 0.6%.

In the United States, an average 3% pay increase is predicted, on par with the previous year and the year before. Adjusted for the expected 1.6% inflation rate in 2020, the real wage increase is forecast to be 1.4%, up from 0.6%.

Korn Ferry’s forecast is slightly lower than WorldatWork’s findings in the “2019-2020 Salary Budget Survey.” That survey found that salary increase budgets in the U.S. grew to a 3.2% average in 2019 and are projected to be 3.3% in 2020.

Korn Ferry forecasts that Canadian workers will see salaries increase by 2.6%, the same as last year. With inflation predicted at 1.9%, the predicted real-wage increase is 0.7%, up slightly from 0.6% the year before.

Asia Expects Highest Real-Wage Growth
In Asia, salaries are estimated to grow by 5.3% in 2020. With an inflation rate of 2.2%, real-wage salaries are expected to be 3.1% higher. That’s up from a real-wage increase of 2.6% last year.

China’s forecasted real-wage growth for 2020 weakened to 2.9%, down from 3.2% last year and 4.2% the year before. Japan, meanwhile,  received a real-wage prediction of 0.6%, up from last year’s prediction of 0.1%. Singapore's forecast of 3.6% real-wage increases is up from 3% last year. 

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 6.2% in 2020. After taking inflation into account, real wages are forecast to rise by 2.6%, up from 2% last year. In Western Europe, workers are expected to see an average increase of 2.5%, and inflation-adjusted real wage increase of 1.2%. That is up from 0.7% real-wage growth in 2019.

Wages are predicted to increase 2.5% in the United Kingdom. Combined with a 2.1% inflation rate, real wages are expected to increase by 0.4%. That is very close to last year’s real-wage increase of 0.6%. Employees in two of Europe’s largest economies, France and Germany, are forecast to see real wage raises of 0.6% and 1.4%, respectively. 

Slower Inflation Helps Salary Growth in Africa
Top-line salaries in Africa are predicted to increase by 7.9% in 2020, and the real-wage increase is predicted to be 2.3%. That’s up from 0.9% last year. In Egypt, salaries are expected to increase by 13.5%, and with a 6.9% inflation rate, employees will see a 6.6% real-wage increase. That’s up from last year’s 0.6% real-wage increase. 

Latin America Sees Mixed Year-Over-Year Real Wage Growth
Employees in Latin America are forecast to see a 4.9% gain in wages. With inflation, the real-wage increase in the region is expected to be 2%, up from last year’s 1.3%.

In Colombia, inflation is expected to be 3.2% for 2020. With a salary increase projected at 4.5%, this puts real wage growth for Colombians at 1.3%. That’s lower than last year’s 2.1%. In Brazil, the expected salary increase is 5.3%, and with 3.7% inflation, workers are expected to see 1.6% increase in real wages. That’s up from a -0.1% decrease in real wages last year. 

Middle East Sees Higher Real-Salary Increase
In the Middle East, wages are expected to increase by 3.6% in 2020, which is the same as last year. However, slower inflation means the real-wage increase is predicted at 1.6%, up from 0.4% last year.

In the UAE, salaries are predicted to increase 3.5% in 2020, and with an inflation rate of 1%, real wages are predicted to grow by 2.5%. That’s up from 0.7% last year. Qatar is forecast to have a 3% salary increase with an inflation-adjusted increase of 0.5%, compared to a -0.5% loss in real wages last year. 

The Pacific Sees the Lowest Real Salary Increase
Wages in the Pacific are forecast to grow by 2.5% in 2020, which is the same as the previous year. Adjusted for inflation, the rise in real wages is predicted to be 0.8%, up from last year’s 0.3%.

Australia will see a 2.5% top-line growth, the same as last year. With a 1.5% inflation rate, a 1% real-wage increase is predicted. That’s up from 0.2% last year. In New Zealand, a 2.5% salary increase is also forecasted, and with 1.9% predicted inflation rate, the real salary increase is expected to be 0.6%, which is up from last year’s 0.3% real salary increase.


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