Global salary increases for 2020: Employers budgeting for 2.1% real-wage growth

A forecast by Korn Ferry estimates that salaries globally are expected to increase by 4.9% on average in 2020. Adjusted for a global inflation rate prediction of approximately 2.8%, real-wage growth is expected to be 2.1%, higher than the only 1% real-wage salary increases across the globe in 2019.

Across the world, salary increases (without accounting for inflation) are expected to be the highest in the following three regions:

1. Africa - 7.9%
2. Eastern Europe - 6.2%
3. Asia - 5.3%

However, after accounting for inflation rate, real-wage salary increases across the world are expected to be the highest in the following three regions:

1. Asia - 3.1%
2. Eastern Europe - 2.6%
3. Africa - 2.3%

(Refer to the image above for the global outlook on 2020 overall and real salary increases)

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We've summed up overall and real salary increases anticipated in 2020 for countries/territories across regions globally below:

North America - salary increase/real salary increases after inflation rates

• United States - 3%/1.4%
• Canada - 2.6%/0.7%

Western Europe - salary increase/real salary increases after inflation rates

• United Kingdom - 2.5%/0.4%
• France - 2%/0.6%
• Germany - 2.9%/1.4%
• Switzerland - 1.5%/0.7%
• Luxembourg - 3.6%/1.7%

Eastern Europe - salary increase/real salary increases after inflation rates

• Russian Federation - 5.1%/0.9%
• Ukraine - 15%/7.3%
• Poland - 4.4%/2.2%
• Turkey - 18%/7.9%
• Albania - 2.6%/0.7%

Latin America - salary increase/real salary increases after inflation rates

• Mexico - 5%/1.7%
• Colombia - 4.5%/1.3%
• Brazil - 5.3%/1.6%
• Argentina - 37.5%/-6.8%
• El Salvador - 2.6%/2.4%

*Global and regional averages exclude Argentina due to its particularly high inflation.

Africa - salary increase/real salary increases after inflation rates

• Mauritius - 4%/0.1%
• South Africa - 6.8%/1.7%
• Nigeria - 13.1%/1.8%
• Egypt - 13.5%/6.6%
• Morocco - 3.9%/3.9%

Middle East - salary increase/real salary increases after inflation rates

• Jordan - 5%/3%
• Oman - 3%/1.1%
• Qatar - 3%/0.5%
• Saudi Arabia - 4%/2%
• United Arab Emirates - 3.5%/2.5%

Asia - salary increase/real salary increases after inflation rates

• Vietnam - 7.7%/4.6%
• Thailand - 5%/3.7%
• Taiwan - 3.9%/3.7%
• Singapore - 4%/3.6%
• Philippines - 5.9%/3.5%
• Papua New Guinea - 4%/0.2%
• Malaysia - 5%/3.5%
• Korea - 4.1%/2.9%
• Japan - 2%/0.6%
• Indonesia - 8.1%/5.1%
• India - 9.2%/5%
• Hong Kong - 4%/1.4%
• China - 6%/2.9%

Pacific - salary increase/real salary increases after inflation rates

• New Zealand - 2.5%/0.6%
• Australia - 2.5%/1%

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Southeast Asia analysis

Mary Chua, Asia Pacific Leader for Rewards and Benefits Practice, Korn Ferry, said: "While Malaysian employers are budgeting for the same level of salary increase for 2020 at 5% as they had for 2019, real-wage growth will decrease in 2020 when inflation rate is considered.

"There has been a lot of discussion that the inflation rate is not reflective of the rising cost of living in Malaysia and the government is working on developing a new index that can provide better accuracy on the cost of living."

Across Southeast Asia, Indonesia is forecast to have the highest real-wage growth at 5.1%, after accounting for an inflation rate of 3%. Although salaries in Singapore are forecast to grow by only 4%, the island-nation’s relatively low inflation rate of 0.4% translates into a 0.6% increase in real-wage growth as compared to last year, the highest in the region.

Mary Chua recommends employers to take a holistic approach when determining pay. "There is a growing rhetoric to address living wages against increased pressure to deliver shareholder’s returns in a challenging business climate.

"Wage growth needs to be in tandem with productivity increases, if not these costs will eventually be passed on to consumers and perpetuate the rising cost of living."

Image / Korn Ferry