Wages in Emerging Markets Set to Rise Dramatically in 2013, Hay Group Study Finds

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Salaries in North America, Europe Likely to Remain Stagnant

Wages in Emerging Markets Set to Rise Dramatically in 2013, Hay Group Study Finds

Treg Lewis, 212.840.1661

Employees in high-growth markets will see their wages skyrocket in 2013, while their counterparts in North America and Europe can expect more modest pay raises in the coming year, according to the latest pay from , the global management consultancy.

In the BRIC countries, pay will climb significantly in 2013, with salaries rising across the board – Brazil (5.5 percent), Russia (9 percent), India (10.5 percent) and China (9.5 percent). Meanwhile, developed economies can expect more cautious increases – for example, just three percent in the United States and the United Kingdom. With annual consumer price index growth factored in—two percent in the U.S. and 2.8 percent in the U.K.— employees in the two countries are set to see a net gain of one percent and 0.2 percent, respectively.

“Ongoing economic uncertainty in North America and Europe has caused organizations in these regions to take a more cautious approach to salary increases than their high-growth-market counterparts,” said Jeff Blair, Hay Group’s U.S. leader. “Global organizations trying to attract top talent across both markets will have to pay careful attention to reward program design and focus more than ever on creating positive cultures with strong values to attract, engage and retain high-performing employees in each region.”

Hay Group’s research is based on the salary expectations of more than 20,000 reward specialists in 69 countries worldwide, representing 14 million employees.

According to Hay Group’s research, salaries in developed Western economies will experience the smallest increases in 2013, as GDP growth remains broadly flat.

Across North America, pay will rise by 2.9 percent, the lowest of any global region — hardly surprising, as the U.S. economy is expected to grow by a mere 2.1 percent next year, Canada by 2.2 percent and Mexico by a slightly healthier 3.9 percent. Still, salary growth in the region is set to outpace inflation, which is predicted to increase 2.6 percent.

In Europe, crisis-weary companies in Greece and Ireland will not raise pay next year, against a tepid regional average salary increase of 3.3 percent. That’s compared to an average pay increase of 5.5 across the region in 2012. Increases in Germany, the UK (both three percent) and France (2.6 percent) will also be subdued in 2013.

However, there is good news for the region’s emerging markets. Ukrainian employees will see pay climb by 10 percent in 2013 – the highest of any European country. Similarly, organizations in Turkey and Russia also plan to raise wages substantially (8 and 9 percent, respectively).

“The financial crisis continues to take its toll on wages in North America and Europe,” said Blair. “With pay rates barely outstripping or in some cases falling behind inflation, organizations in these regions must place a greater emphasis on variable pay and non-financial recognition programs, as well as career development opportunities to retain key talent.”

Latin American firms are set to be the big spenders of 2013, with average pay raises of 9 percent expected across the region.

Venezuela will enjoy the highest pay increases (29 percent) and Argentine organizations will also implement considerable wage hikes (24.5 percent). Guatemala will see the smallest raises in the region, but salaries are still set to climb by 4.5 percent next year – 1.5 percent higher than in the US, UK and Germany.

African organizations are also planning significant pay raises next year, particularly in comparison to their neighbors in the Middle East.

In Egypt, pay will climb by 10 percent, followed closely by South Africa (7 percent). By contrast, Middle Eastern economies such the United Arab Emirates (5 percent), Oman (5 percent) and Bahrain (4.3 percent) can expect more modest wage increases.

In Asia, pay will rise by some 7.5 percent in 2013. Interestingly, pay increases in the second generation of high growth Asian economies are outstripping those of their colleagues in the region’s more developed countries.

For example, in Japan, wages will increase just two percent next year. Whereas, in less mature markets – including Vietnam (12.8 percent), Indonesia (10.6 percent), the Philippines (eight percent) and Malaysia (6.2 percent) – wages are rising rapidly.

China is the biggest surprise, as the intensifying “war for talent” will see wage hikes of 9.5 percent in 2013 – up 1.1 percent from last year – despite slower economic growth.

For further information on this story or to interview Jeff Blair, please contact Treg Lewis at or 212.840.1661.

was drawn from Hay Group PayNet which contains data for more than 14 million job holders in 20,000 organizations across more than 100 countries. Growth domestic product (GDP) and consumer price index (CPI) figures were sourced from the Economist Intelligence Unit, November 2012.

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