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New Zealanders continue to see higher real wage increases than Australians

Press Release   •   Nov 10, 2016 18:05 GMT

  • Australians forecast to see the second lowest 'real’ wage increases in Asia Pacific next year
  • Salaries forecast to rise just 0.9 per cent above inflation in 2017 – down on wage increases seen in 2016
  • Real wage increases in Asia Pacific forecast at 2.6 per cent in 2017- higher than all other regions
  • Vietnam to see highest real wage increase in Asia Pacific

Next year employees based in Australia are forecast to receive salary increases 0.9 per cent above inflation on average, according to the latest Salary Trends survey by ECA International, the world's leading provider of knowledge, information and software for the management and assignment of employees around the world.

Despite offering 3 per cent nominal salary increases in both 2016 and 2017, rising inflation has meant that staff in Australia will see a decline in real wage* increases next year. Employees based in New Zealand should see a similar pattern emerge with rising inflation, although they will continue to enjoy larger wage increases than their Australian counterparts. They are forecast real wage increases of 1.4 per cent in 2017.

“The Australian economy has taken various hits in recent years. Business and capital investment is significantly down, GDP expansion has slowed and a recent World Economic Forum report suggested Australia's trade competitiveness has also declined,” said Anna Michielsen, General Manager – Australia, ECA International. “Household consumption appears to be one of the primary drivers of growth here. However, much of the improvement in domestic demand can be attributed to lower interest rates. Wages continue to rise marginally above inflation but are below the regional average and are the second lowest in the Asia Pacific region”.

ECA's Salary Trends Reports analyse current and projected salary increases for local employees. They provide information on real pay rises by factoring in inflation rates. This year, they are based on information collected from 260multinational companies across 72 countries.

Asia Pacific highlights

On average, real wage increases in Asia Pacific are expected to be 2.6 per cent in 2017, higher than all other regions surveyed. In terms of real salary increases, it is staff in Vietnam that will experience the highest regional and second highest global real wage increase in 2017 at 5.4 per cent. Staff based in Myanmar can expect to be 1.6 per cent worse off in 2017. Despite being forecast nominal salary increases of 7.5 per cent, with inflation forecast at 9.1 per cent, they are the only location in the Asia Pacific region that will see staff worse off in 2017.

In mainland China, companies are planning to award 7 per cent salary increases next year. After inflation is factored in, staff here will see the fourth highest wage increases globally in 2017: they can expect to see increases of 4.7 per cent in real terms. Despite its continued economic slowdown, which is expected to continue in 2017, China’s economy remains the second largest in the world.

Hong Kongers will see their salaries increase by an average of 4 per cent again in 2017. After factoring in inflation, predicted to be 2.6 per cent in 2017, employees will experience the third lowest wage increase in Asia Pacific, estimated to be a 1.4 per cent wage increase in real terms.

Employees based in Macau are forecast real wage increases of 1.7 per cent in 2017, overtaking Hong Kong in the regional rankings. These forecast wage increases are up on the 1.5 per cent experienced by staff in Macau in 2016.

After another period of deflation in Japan, the IMF is predicting marginal inflation throughout 2017. The continued oscillation between inflation and deflation suggests that the government’s efforts to raise wages in recent years, to encourage spending, may not be sustainable and Japan should continue to see small salary increases in the foreseeable future. In terms of real wage increases, staff in Japan can expect 1.9 per cent uplifts in 2017, the sixth lowest in the Asia Pacific region.

Organisations based in India are offering the second highest real wage increases in the Asia Pacific region in 2017. On average, rising nominal salary increases combined with falling inflation in 2017 means that staff are forecast 4.8 per cent wage increases in real terms.

Global markets

Employees in Argentina will experience the largest global increase in spending power in 2017, estimated to be a 6.5 per cent wage increase in real terms. Argentina has seen the largest rise in the ECA Salary Trends global rankings this year, moving up 70 places between 2016 and 2017. President Macri’s election in 2015 brought with it more market-friendly economic policies and support from the Argentinian business community. The new government also forged agreements with previous creditors allowing Argentina renewed access to international credit after over a decade of being unable to borrow from abroad. The new investment, alongside an expected significant decline in inflation, could lay the foundations for a better economic future after a long period of instability and uncertainty.

According to company predictions from around the globe, nominal wages will rise 5 per cent on average in 2017, slightly up on this year’s 4.8 per cent average. In terms of real salary increases, the global average is forecasted to be 1.5 per cent, which is slightly down on 2016’s average of 1.6 per cent.

Companies anticipate salaries in the UK will increase by 2.9 per cent on average in 2017. The sharp fall in the value of the pound since the UK’s Brexit referendum is expected to contribute towards higher living costs in the UK which will see real wage increases fall to just 0.3 per cent next year, compared to the 1.9 per cent wage increases seen in 2016. Inflation is expected to hit 2.5 per cent over the next 12 months in the UK.

The UK’s average real wage increase is expected to fall behind the rest of Europe. In 2017, salaries in Europe are expected to rise by 1.3 per cent on average, down from the 1.8 per cent real wage increases seen in 2016. Russia is forecast to have the largest real salary increase in Europe, ranked 10th in the global rankings with an expected increase of 3 per cent.

Ukraine looks set to retain its place at the bottom of the European rankings for real wage increases in 2017. Forecasts for 2017 salary increases here fall below the expected rate of inflation; a real-terms wage decrease is therefore predicted, at -1 per cent. Although likely to remain elevated, inflation is nevertheless expected to decline in 2017 to 11 per cent, slightly reducing upward pressure on wages.

In Canada and the US, companies are predicting 0.9 and 0.7 per cent real wage increases respectively – down on this year’s uplifts. Staff based in the Americas overall can expect to receive 1.6 per cent uplifts in 2017, up from 0.5 per cent in 2016. While employees based in Africa and the Middle East are set to see real wage rises of 0.5 per cent on average. The situation for staff in Egypt has taken a further step in the wrong direction with staff expected to be 8.2 per cent worse off in 2017. The Egyptian government’s plans to cut its total subsidy bill in the coming fiscal year 2016/17 has contributed to the higher inflation forecast for 2017. Fuel subsidies were the hardest hit leading to domestic prices of fuel soaring in Egypt.

*’Real terms' refers to wages that have been adjusted for inflation. Forecast inflation rates are based on information from the International Monetary Fund – excluding Argentina. Data via Consensus Economics was used to determine Argentina’s inflation rate.

-ENDS-

Notes to Editors

  • Venezuela and Argentina have been excluded from global averages as they skew the average; their reported nominal salary increases for 2017 were 90 per cent and 27 per cent respectively.
  • Please note that all figures have been rounded to one decimal place

About ECA's Salary Trends Survey

The information above was taken from ECA's Salary Trends Survey 2016/2017. The survey reports current-year salary increases for local national employees and the anticipated increases for reviews in the forthcoming year. It is based on information collected from 260 multinational companies for 72 countries. Reports are available free to all participants or for purchase either as a set or individually per country for non-participants from the ECA website. Further information regarding ECA surveys can also be found on the website.

Data is based on increases including merit. Including merit is the total salary increase and represents general cost of living/inflationary increases plus performance/merit related increases. The data above was collected from August to September 2016. The survey included data from all seniorities across the following industry groups which included Energy, mining & petrochemicals; Chemical & pharmaceutical; Transport & logistics; Manufacturing & consumer goods; Legal & professional services; Engineering & technology; Retail, leisure & other services; Financial services; Non-Profit.

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About ECA International (www.eca-international.com)

ECA International is the market leading provider of knowledge, information and technology that enables businesses to manage their international reward programmes.

Partnering with thousands of clients on every continent, we provide a fully integrated suite of quality data, specialist software, consultancy and training. Our unparalleled insights guide clients as they mobilise their most valuable resource: people.

We make the complex world of international mobility simple, providing clients with the expertise and support they need to make the right decisions - every time.

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