Salaries are increasing at a faster rate than last year according to data from management consultancy, Hay Group. However New Zealand employees won’t be seeing large pay rises next year.
According to the report salary inflation in New Zealand has remained subdued since the GFC despite solid economic growth and a shortage of skills in some industries. Overall annual salary growth has followed a very narrow track between 2.5% and 2.9% over the last four years.
For 2015 Hay Group expects salary movements to average 3%, lower than the global average of 5.4%
It cites the absence of general inflationary pressures both locally and globally in helping contain salary inflation in New Zealand, as well as the arrival of a significant number of migrants with work visas. Additionally organisations are now more focused on rewarding those who are critical to the organisation’s success rather than necessarily providing overall increases to all employees.
The report states New Zealand's salary inflation is likely to continue to remain at 3% until the economic recovery becomes more widespread and the labour market tightens further.
Meanwhile in Asia, salaries are forecast to increase by 6.8% – down 0.2% from last year – but with relatively low predicted inflation (3.7%), employees are set to experience the highest growth in real income across the globe (3.1%). The largest increases are forecast in Vietnam (11.4%), Indonesia (10.0%) and China (8.0%).
The report attributes the high pay rises in Asia to the ongoing war for talent, both for experienced managers and new graduates from the best universities. In China, it is also the result of pressure from the government to create a burgeoning middle class – which means minimum wages are rising across China’s second and third tier cities. And in Vietnam, workers are benefitting from the country’s higher than average GDP growth.
In Europe salaries are expected to rise by 3.1% while in the UK employees will see a rise of 2.5%, the same as last year. Pay rises in North America are forecast at 2.8% – up 0.1% compared to last year.
Simon Woolley, Business Unit Leader, Hay Group New Zealand explained: “This year’s global forecast shows pay rises rising at a higher rate this year compared to last.
However, this conceals stark variations from region to region and country to country. Each market has its own complexities and organisations must understand the detail if they want to attract and retain the best workers. The big turnaround is between Europe and the emerging markets. Real pay is now rising in many European markets, but in key emerging economies, which have been the boom area of the last 10 years, real wages are falling.”