Average pay rises of 9% are expected across Latin America next year, with workers in Venezuela enjoying the highest pay increase (or around 29%) both in the region and in the world, a study by global management consultancy Hay Group showed.
Venezuela was followed by Argentina with 24.5%.
“The big driver in some of Latin America is inflation,” Ben Frost, global product manager at Hay Group, told Emerging Markets.
Salaries in Brazil are to rise by 5.5% next year and in Mexico by 5%.
Countries in emerging markets across the globe will see fast increases in wages, in line with quicker economic growth, while in developed markets such as the US, the UK and Western Europe salaries are expected to barely inch up or even stagnate.
Frost said there were three main drivers for this: inflation, the general state of the economy and supply and demand – with generally fewer qualified employees in emerging markets compared with the needs of the companies.
Greece and Ireland, with no wage growth, “will be particularly hard hit,” Hay Group said; in Germany and the UK wages will increase by 3%, in France by just 2.5%, in Italy by 2.7% and in Spain by 1.5%.
“You can argue that the ability to pay is there more in emerging markets than in the eurozone,” said Frost.
“The fact that we are having high unemployment and companies are not hiring means there are not many pressures for pay rises.”
By contrast, salaries in Ukraine will jump by 10%, in Russia by 9% and in Turkey by 8%.
The research was based on salary expectations collected from more than 20,000 reward specialists in 69 organizations across the globe, representing about 14 million employees.
In North America, salaries will increase by just 2.9%.
PRESSURES NOT GOING AWAY
Asia, like Europe, is also a “two-speed” continent when it comes to pay rises. In developed Japan, salaries are slated to increase by just 2% while in Vietnam they will surge by 12.8%, in Indonesia by 10.6% and in the Philippines by 8%.
In China, the intensifying “war for talent” will push wages up 9.5%, according to Hay Group, while in India they will jump by 10.5%.
Egypt is the country where wages will increase fastest in the Middle East and Africa, with 10% hikes predicted, followed by South Africa and Kuwait with 7% and Jordan with 6%.
The trend of salaries increasing faster in emerging markets than in developed ones has been going on for 10 years, with pay differences flattening when it comes to management compensation, and it looks set to continue.
“I can’t see those pressures going away,” Frost said, citing China, Russia, Turkey and South Africa among the countries were fast pay increases for employees were likely.
“The big question is how will emerging markets maintain their competitiveness? Cash is a bit like caffeine... it can motivate people in the short term,” he added.
As measures to retain staff outside of pay rises, companies in emerging markets could invest in training their workers, as skilled employees are more productive, and in training managers, who can make a difference in whether people stay with a certain company or leave to look for a new job, Frost said.