Investor Relations

Press Release

Korn Ferry 2018 Salary Forecast: Smaller Real Wage Increases Across Most Parts of the World

December 12, 2017

- Adjusted for Inflation, Real Wages Up Only an Average of 1.5 Percent –

- U.S. Real Wage Growth Half of What it Was Last Year -

- U.K., UAE and Egypt See Declines in Real Wages-

- Asia Sees Highest Real Wage Growth, Though at Slower Pace Than Last Year -

LOS ANGELES--(BUSINESS WIRE)--Dec. 12, 2017-- A forecast issued today by the Hay Group division of Korn Ferry (NYSE: KFY) reveals that, adjusted for inflation, employees around the world are expected to see real wage increases of only an average of 1.5 percent, down from 2017’s prediction of 2.3 percent and 2016’s prediction of 2.5 percent.

“With inflation rising in most parts of the world, we’re seeing a cut in real wage increases across the globe,” said Bob Wesselkamper, Korn Ferry Global Head of Rewards and Benefits Solutions. “The percentage of salary increase or decrease will vary by role, industry, country and region, but one thing is clear, on average, employees are not seeing the same real pay growth they did even one year ago.”

Australasia Sees the Lowest Real Salary Increase

Wages in Australasia are forecast to grow by 2.5 percent, which is an increase of 0.7 percent in real wages when adjusted for inflation. Australia will see a 2.5 percent top-line growth, a 2.1 percent inflation rate, and a 0.4 percent real wage increase. In New Zealand, a 2.5 percent salary increase is forecast, with 1.5 percent inflation, for a 1 percent real salary increase.

North America Lagging

In the United States, an average 3 percent pay increase is predicted, which is the same as last year. Adjusted for the expected 2 percent inflation rate in 2018, the real wage increase is 1 percent – down from last year’s 1.9 percent. Canadian workers will see salaries increase by 2.6 percent, and with inflation at 1.7 percent, will experience real wage growth of 0.9 percent.

Eastern Europe Faring Better than Western Europe

According to the Korn Ferry forecast, employees in Eastern Europe are set to see an average salary increase of 6 percent in 2018. However, after taking inflation into account, real wages will only rise by 1.4 percent, which is down from 2.1 percent last year. In Western Europe, workers are expected to see lower wage increases, with an average increase of 2.3 percent, and inflation-adjusted real wage increases of 0.9 percent.

With the continued uncertainty following the Brexit decision, wages in the United Kingdom are up just 2 percent. Combined with a 2.5 percent inflation rate, real wages are expected to decrease by -0.5 percent. This is in contrast to 2017, when inflation-adjusted wages in the U.K. were up 1.9 percent. Employees in two of Europe’s largest economies, France and Germany, are forecasted to see real wage rises of 0.7 percent and 0.8 percent respectively.

Smaller Increases in the Middle East

In the Middle East, wages are expected to increase by 3.8 percent, compared to 4.5 percent last year. Inflation-adjusted wage increases are predicted to be 0.9 percent, compared to 2.5 percent last year. In the UAE, inflation of 4.6 percent combined with pay increases of only 4.1 percent, means that real wages will fall by -0.5 percent.

Jordan and Lebanon saw the biggest drops in the region, with Jordan predicted to have a 1.6 percent real wage growth, down from 6.3 percent last year, and Lebanon predicted at 1.8 percent compared to 6.1 percent last year.

Inflation Tempers Salary Growth in Africa

Although top-line salaries will increase by 8.5 percent in Africa, high inflation means the real increase is only 1.7 percent, which is up from 0.7 percent last year. In Egypt, top-line salaries will increase by 15 percent, but an 18.8 percent inflation rate means employees will see a cut in real wages of -3.8 percent.

Latin America Sees Second-Highest Real Wage Growth

Employees in Latin America are forecasted to see a 6.2 percent increase in wages, and with inflation slowing down in the region, real wage increases will reach 2.1 percent, up from last year’s 1.1 percent. In Colombia, inflation is expected to be 2.7 percent for 2018. With a salary increase projected at 5.3 percent, this puts real wages for Colombia up 2.6 percent. In Brazil, the expected salary increase is 7.3 percent, and with 4 percent inflation, the real increase is expected to reach 3.3 percent.

Highest real wage growth in Asia – Though Increases Slowed from Previous Year

In Asia, salaries are forecast to increase by 5.4 percent – down from 6.1 percent last year. Inflation-adjusted real wage increases are expected to be 2.8 percent – the highest globally, but down from 4.3 percent last year. China remained consistent with real wage increases predicted at 4.2 percent for 2018, compared to 4 percent last year. Most countries in this region saw a drop in year-over-year real wage prediction increases – including Vietnam’s forecast of 4.6 percent, down from 7.2 percent, Singapore at 2.3 percent, down from 4.7 percent, and Japan at 1.6 percent, down from 2.1 percent.

“Slower economic growth in mature economies keeps a check on pay raises,” said Wesselkamper. “In emerging economies, upskilling workers is crucial for companies to maintain a competitive advantage – and those skilled employees can expect to see wages rise as talent shortages in certain regions drive salaries upward.”

Korn Ferry pay experts recommend taking a holistic approach when determining pay.

“While inflation indices are a solid benchmark for reviewing market trends in pay, we recommend that companies take a broader perspective by defining and agreeing upon their own measures of cost drivers, business strategy and local trading conditions,” said Benjamin Frost, Korn Ferry’s Global General Manager – Pay. “Compensation programs need to be regularly reviewed to make sure they align with changing business and market conditions.”

About the study

The data was drawn from Korn Ferry’s pay database which contains data for more than 20 million job holders in 25,000 organizations across more than 110 countries.

It shows predicted salary increases, as forecasted by global HR departments, for 2018 and compares them to predictions made at this time last year regarding 2017. It also compares them to 2018 inflation data from the Economist Intelligence Unit.

Our interactive site with more detailed figures, and downloadable infographic with headline figures for each country are here:

Editor’s Note: Global averages exclude Venezuela, Argentina and Ukraine, and regional averages exclude Venezuela due to particularly high inflation.

                       
Region     Country    

2018
salary
forecast

   

2018
inflation
forecast

   

2018
"real"
salary
increase

   

2017
salary
forecast

   

2017
"real"
salary
increase

East Europe     Albania     2.6%     2.8%     -0.2%     -     -
Africa     Algeria     6.5%     5.7%     0.8%     5.6%     -1.1%
Latin America     Argentina     21.9%     14.6%     7.3%     28.5%     -12.5%
East Europe     Armenia     5.3%     3.3%     2.0%     -     -
Pacific     Australia     2.5%     2.1%     0.4%     3.0%     1.6%
West Europe     Austria     2.5%     1.7%     0.8%     2.0%     1.1%
East Europe     Azerbaijan     10.0%     5.2%     4.8%     -     -
Middle East     Bahrain     4.0%     2.1%     1.9%     5.0%     1.8%
East Europe     Belarus     10.2%     10.5%     -0.3%     -     -
West Europe     Belgium     3.0%     1.7%     1.3%     2.8%     1.0%
Latin America     Bolivia     6.8%     4.4%     2.4%     -     -
Africa     Botswana     4.7%     4.0%     0.7%     5.4%     2.0%
Latin America     Brazil     7.3%     4.0%     3.3%     8.8%     0.4%
East Europe     Bulgaria     3.8%     2.0%     1.8%     4.0%     4.7%
North America     Canada     2.6%     1.7%     0.9%     2.5%     0.9%
Latin America     Chile     4.8%     2.7%     2.1%     4.9%     1.0%
Asia     China     6.0%     1.8%     4.2%     6.1%     4.0%
Latin America     Colombia     5.3%     2.7%     2.6%     6.8%     -0.8%
Latin America     Costa Rica     3.7%     3.3%     0.4%     5.0%     4.6%
East Europe     Croatia     2.8%     1.8%     1.0%     -     -
West Europe     Cyprus     3.7%     1.3%     2.4%     2.0%     3.1%
East Europe     Czech Republic     3.9%     2.0%     1.9%     2.8%     2.2%
West Europe     Denmark     2.0%     1.9%     0.1%     2.1%     1.7%
Latin America     Dominican Republic     5.1%     3.8%     1.3%     5.5%     3.9%
Latin America     Ecuador     5.0%     0.6%     4.4%     5.0%     3.3%
Africa     Egypt     15.0%     18.8%     -3.8%     9.8%     -3.0%
Latin America     El Salvador     3.7%     1.5%     2.2%     3.4%     2.7%
East Europe     Estonia     3.5%     3.0%     0.5%     3.3%     3.1%
West Europe     Finland     1.0%     1.2%     -0.2%     1.0%     0.6%
West Europe     France     2.0%     1.3%     0.7%     1.8%     1.5%
East Europe     Georgia     5.7%     3.1%     2.6%     -     -
West Europe     Germany     2.4%     1.6%     0.8%     2.5%     2.2%
Africa     Ghana     15.6%     9.7%     5.9%     -     -
West Europe     Greece     2.0%     1.0%     1.0%     2.0%     2.1%
Latin America     Guatemala     4.7%     4.7%     -0.0%     5.0%     0.6%
Latin America     Honduras     5.1%     4.1%     1.0%     6.0%     3.1%
Asia     Hong Kong     4.0%     2.3%     1.7%     4.2%     1.5%
East Europe     Hungary     4.6%     2.9%     1.7%     3.0%     2.9%
Asia     India     9.0%     4.3%     4.7%     10.0%     4.8%
Asia     Indonesia     8.0%     4.6%     3.4%     8.6%     4.9%
Middle East     Iraq     3.0%     2.0%     1.0%     -     -
West Europe     Ireland     2.3%     0.3%     2.0%     2.0%     2.0%
West Europe     Italy     2.7%     0.9%     1.8%     2.6%     2.6%
Asia     Japan     2.0%     0.4%     1.6%     2.0%     2.1%
Middle East     Jordan     4.0%     2.4%     1.6%     5.5%     6.3%
East Europe     Kazakhstan     9.0%     6.2%     2.8%     8.6%     -5.8%
Africa     Kenya     7.5%     6.5%     1.0%     -     -
Asia     Korea     4.5%     1.7%     2.8%     5.0%     4.1%
Middle East     Kuwait     4.3%     3.6%     0.7%     4.1%     0.8%
East Europe     Latvia     4.0%     3.0%     1.0%     4.0%     4.4%
Middle East     Lebanon     5.0%     3.2%     1.8%     5.1%     6.1%
East Europe     Lithuania     5.0%     2.8%     2.2%     4.3%     3.8%
West Europe     Luxembourg     2.6%     1.6%     1.0%     2.8%     2.9%
Asia     Malaysia     6.0%     2.5%     3.5%     5.8%     3.9%
Africa     Mauritius     4.2%     1.3%     2.9%     -     -
Latin America     Mexico     4.6%     3.9%     0.7%     4.6%     1.9%
Africa     Morocco     3.8%     1.2%     2.6%     3.5%     1.8%
Africa     Mozambique     10.0%     6.5%     3.5%     -     -
Africa     Namibia     7.0%     5.8%     1.2%     -     -
West Europe     Netherlands     2.6%     1.4%     1.2%     2.5%     2.3%
Pacific     New Zealand     2.5%     1.5%     1.0%     2.5%     1.9%
Latin America     Nicaragua     6.6%     4.5%     2.1%     5.8%     2.0%
Africa     Nigeria     10.8%     13.9%     -3.2%     -     -
West Europe     Norway     2.5%     1.8%     0.7%     2.0%     -1.5%
Middle East     Oman     3.0%     2.2%     0.8%     3.0%     1.8%
Latin America     Panama     3.0%     1.4%     1.6%     4.0%     3.2%
Asia     Papua New Guinea     4.0%     6.6%     -2.6%     -     -
Latin America     Peru     4.3%     2.8%     1.5%     5.0%     1.6%
Asia     Philippines     5.0%     2.2%     2.8%     6.0%     4.3%
East Europe     Poland     3.5%     2.2%     1.3%     3.0%     3.8%
West Europe     Portugal     2.0%     1.3%     0.7%     2.0%     1.3%
Middle East     Qatar     3.7%     2.6%     1.1%     5.0%     2.1%
East Europe     Romania     5.0%     2.5%     2.5%     4.3%     5.7%
East Europe     Russian Federation     7.0%     4.0%     3.0%     7.0%     -0.1%
Middle East     Saudi Arabia     3.2%     3.1%     0.1%     5.0%     0.8%
East Europe     Serbia     4.8%     2.7%     2.1%     4.1%     3.0%
Asia     Singapore     3.7%     1.4%     2.3%     4.0%     4.7%
East Europe     Slovakia     3.0%     1.7%     1.3%     2.6%     3.0%
Africa     South Africa     7.0%     5.4%     1.6%     7.0%     0.5%
West Europe     Spain     2.0%     1.0%     1.0%     1.9%     2.3%
West Europe     Sweden     2.0%     1.8%     0.2%     2.3%     1.5%
West Europe     Switzerland     1.7%     0.6%     1.1%     1.5%     1.8%
Asia     Taiwan     4.0%     0.7%     3.3%     -     -
Africa     Tanzania     7.9%     5.2%     2.7%     -     -
Asia     Thailand     5.5%     1.0%     4.5%     5.8%     5.6%
Africa     Tunisia     7.1%     4.9%     2.2%     7.3%     3.8%
East Europe     Turkey     9.0%     8.0%     1.0%     8.9%     1.2%
Africa     Uganda     8.0%     5.5%     2.5%     -     -
East Europe     Ukraine     15.0%     10.6%     4.4%     11.3%     -1.9%
Middle East     United Arab Emirates     4.1%     4.6%     -0.5%     3.0%     0.5%
West Europe     United Kingdom     2.0%     2.5%     -0.5%     2.5%     1.9%
North America     United States of America     3.0%     2.0%     1.0%     3.0%     1.9%
Latin America     Uruguay     7.9%     6.8%     1.1%     -     -
East Europe     Uzbekistan     7.3%     15.0%     -7.7%     -     -
Latin America     Venezuela     83.0%     1104.2%     -1021.2%     110.9%     -373.9%
Asia     Vietnam     8.6%     4.0%     4.6%     10.0%     7.2%
Africa     Zambia     12.3%     6.9%     5.4%     -     -
 

About Korn Ferry

Korn Ferry is the preeminent global people and organizational advisory firm. We help leaders, organizations and societies succeed by releasing the full power and potential of people. Our more than 7,000 colleagues deliver services through Korn Ferry and our Hay Group and Futurestep divisions. Visit kornferry.com for more information.

Source: Korn Ferry

Korn Ferry
Tracy Kurschner, 612.309.3957
Tracy.Kurschner@KornFerry.com

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