Global management consultancy Hay Group’s latest forecast data – which is based on the expectations of over 22,000 organisations in 71 countries – reveals Australia’s salary growth is expected to slow to 3% in 2014, down from the 4% forecast of 2013. This is the slowest growth rate seen since the GFC.
Globally, salaries are expected to increase by an average of 5.2%, compared to 2013’s 5.5%.
The forecast for 2014 is characterised by a two-speed trend, with pay rises in North America predicated at 2.7%, reflecting cautious optimism in the economy.
In the UK, pay increases are expected to average 2.5%, dropping behind inflation, which is expected to hover around 2.7%.
Compared to these slow growths, the emerging nations of Europe expect noticeable increases. Ukraine (7.9%), Russia (7.8%) and Turkey (7.7%) are experiencing the greatest increase in wages, but also lag behind the forecasts of last year.
“Even where optimistic rises are expected in fast growing markets, high inflation means the economic recovery won’t be felt in the pay packets of employees in many countries,” Steve Paola, senior consultant at Hay Group, said.
Australian organisations must remain watchful of the bottom line in order to remain competitive, however Paola added that there is an opportunity for organisations to become creative in how they reward staff.
“It’s about spending smarter, not more, and reviewing return on reward spend,” he explained. “Securing the commitment of employees by developing clear career management plans, nurturing key talent and creating a buzz around the company’s vision can also play a role in engaging and retaining employees over the long-term.”
With pay rises across the world in decline, Australia looks set to join the tumble, with salary growth expected to drop for Australians in 2014.