Global salaries 2018: increase of 1.5 percent on average

"Inflation in the West is noticeably back," says Thomas Gruhle, compensation expert at Korn Ferry Hay Group. "Companies have not raised salaries less in nominal terms than in previous years. Demonetization already ate up much of those gains in 2017 and will continue to do so in 2018." And so nominal salary increases are 2.3 percent in Western Europe, 2.5 percent in Australia and as high as 2.8 percent in North America. In the Middle East, inflation is expected to average 2.9 percent. This means that only 0.9 percent of the nominal wage increase of 3.8 percent will remain. Thomas Gruhle says: "The exorbitant price increases in real estate, stocks and commodities are only marginally considered in the calculation of inflation. For young people in the West, it is therefore becoming increasingly difficult with these rates of increase to build up assets in the long term."

Real wages fall in the United Kingdom and Finland

UK residents will have 0.5 percent less in their wallets in 2018, while Finns will have 0.2 percent less. Thomas Gruhle says: "In both countries, companies plan to raise nominal wages only very slightly." In the UK by 2.0 percent, in Finland only by 1.0 percent. "Inflation is doing its bit to turn the wage increase into a de facto real wage decrease." The smallest real increases are in Denmark (0.1 percent), Sweden (0.2 percent) and France, Norway and Portugal (0.7 percent each). The strongest increases in Western Europe are expected for Cyprus (2.4 percent), Ireland (2.0 percent) and Italy (1.8 percent).

In Eastern Europe, including countries such as Russia and Ukraine, the situation is a bit better. While many countries are struggling with even higher inflation than the West, companies want to raise nominal wages by an average of 6.0 percent. This leaves people in the East with 1.4 percent in real terms after deducting inflation. The winners are Azerbaijan (4.8 percent), Ukraine (4.4 percent) and Russia (3.0 percent). "But EU members in the East also have better forecasts than in the West," says Thomas Gruhle. Real purchasing power will increase by 2.5 percent in Romania, 2.2 percent in Lithuania, 1.9 percent in the Czech Republic and 1.8 percent in Bulgaria.

Asia loses compared to previous year, Latin America gains

 2.8 percent real wage increases are planned in Asia. Companies are planning an average increase of 5.4 percent in nominal salaries. "Salary increases in Asia remain well above those in the West," says Thomas Gruhle. "Qualified labor is becoming harder to find, especially in emerging and newly industrialized countries, and thus considerably more expensive." Indian companies, for example, are increasing their salaries by a nominal 9.0 percent (real wage increase: 4.7 percent). In Vietnam, a nominal increase of 8.6 percent is expected (real: 4.6 percent), in China by 6.0 percent (real: 4.2 percent) and in Thailand by 5.5 percent (real: 4.5 percent). Thomas Gruhle says: "Inflation in some parts of Asia is lower than in the West - and where it is not, companies are compensating with significant nominal wage increases."

Economically fragile Argentina is expected to achieve the largest real wage increases in Latin America at 7.3 percent (nominal: 21.9 percent), followed by Ecuador at 4.4 percent (nominal: 5.0 percent) and Brazil at 3.3 percent (nominal: 7.3 percent). If we exclude Venezuela, which is difficult to assess, wage increases in Latin America will be 6.2 percent in nominal terms and 2.1 percent in real terms. Thomas Gruhle says: "If we compare Asia and Latin America with last year's figures, we get an interesting picture. In which Asia is losing significantly this year and the Americas South is gaining significantly." This is because the forecasts for 2017 in Asia were 4.3 percent in real terms, while in Latin America they were only 1.1 percent.

Salaries in Africa with highest nominal growth worldwide

A positive development is also discernible for Africa. The forecast nominal growth in wages is 8.5 percent, leaving 1.7 percent in real terms. "Inflation will indeed pick up significantly in 2018," says Thomas Gruhle. "But companies in Africa are planning to increase nominal wages the most in the world. This is an impressive demonstration of the will for economic growth and prosperity."

Income growth will be strongest in Ghana (real: 5.9 percent, nominal: 15.6 percent), Zambia (real: 5.4 percent, nominal: 12.3 percent) and Mozambique (real: 3.5 percent, nominal: 10.0 percent). In Nigeria, on the other hand, people will have less money to spend on consumption despite a nominal increase of 10.8 percent -3.2 percent in real terms. "Nigerians are the losers in 2018 salary increases in sub-Saharan Africa due to above-average inflation despite the economic strength of the location," says Thomas Gruhle. Above the Sahara, Egypt is the loser with a minus of -3.8 percent (nominal increase: 15.0 percent).

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