The report highlights marked differences between countries, with Latvia, Paraguay and China leading the pack with increase rates of at least 5% above inflation. Germany, Hungary, the Ukraine and Argentina close the march with pay increases inferior to inflation, leave workers worse off in real terms.
Steve Gross, a worldwide partner at Mercer, says: "Global companies need to be espcially aware of key economic and labour market differences when setting compensation budgets and deciding how to allocate resources to generate the greatest return on their rewards investment."
Most of the western world is experiencing stable or moderate growth in compensations, whilst emerging markets such as Eastern Europe, Asia and Latin America in particular are forecasted to see some of the highest salary increases. At the top end for real pay increases, Latvians are expected to see an 11.1% pay rise compared to inflation of 4.3%. Europe is divided between moderate real salary increases in the west and higher increases in parts of the emerging east, offset in some countries by high inflation.
In North America, Canadians will fare marginally better than Americans, with increases above inflation of 1.7% and 1.3% respectively. US real wage growth has been modest since the bursting of the dotcom bubble five years ago.
Mexicans continue to see low improvements to real pay, 4.5% against inflation of 3.7%, while inflation is also eating into pay rises in Argentina and Venezuela. Salaries in Argentina will rise by 11.8%, falling behind a 15% inflation rate, while in Venezuela inflation and salaries are almost pegged at 17.3 and 17.4%. Brazil performs better with a 2.0% real increase in pay rates.
In parts of Asia, continued high FDI flows and rising productivity is helping to raise salaries significantly above inflation. Indonesian pay rates will rise by 11.4% against inflation of 6.6%, and Chinese pay will rise by 7.2% against inflation of 2.2%.
Worldwide Pay Survey 2007
Mercer Human Resources Consulting
Review by Emilie Filou