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Companies in the UK are forecasting 3% pay rises again in 2014

06 Nov 2013


But after inflation employees there will have the second lowest real wage increases in Europe

London, 6 November 2013 – Employees in the UK can expect to see their salaries increase by an average of 3 per cent next year, according to the latest Salary Trends survey by ECA International, the world's leading provider of knowledge, information and technology for the management and assignment of employees around the world.
 
“Next year will be the 4th year in a row where companies have reported 3 per cent wage increases in the UK,” said Steven Kilfedder, Manager, Cost of Living and Remuneration Services at ECA International. “If inflation is 2.3% as IMF predictions indicate, employees in the UK will experience increases of just under 1% in real terms. While this would be higher than they’ve seen in recent years these would be the 2nd lowest real wage increases in Europe after Finland, and are among the lowest of all the countries we surveyed.”
 
The highest pay increases in Europe are being forecast by companies in Russia and Ukraine. Employees there can expect to see 8 per cent salary hikes next year. However, the average pay rise across Europe is anticipated to be 3.5 per cent.
 
Companies in Switzerland and Greece are forecasting the lowest wage increases in Europe and in the survey. Employees there can expect salary rises of around 2 per cent. However, despite these low increases little, if any, of this is likely to be eroded by inflation in contrast to many of their peers who will be worse off than them in real terms.
 
ECA's 2013/2014 Salary Trends Survey reports on current and projected salary increases for local employees. The data is used by companies to monitor pay rises in both the home and host locations of their expatriate staff so that they can update pay packages according to the salary systems they use – and ensure that system is still the most effective for meeting business objectives. This year, it is based on information collected from 316 multinational companies across 64 countries and regions.
 
 

Global markets

 
Wages will rise almost 6 per cent in 2014 on average according to company forecasts from around the globe, with most employers setting increases at the same or very similar levels to this year. Asia and Latin America are the regions that will see the highest wage increases, with companies there forecasting rises of approximately 10 per cent, and 11 per cent respectively. However, inflation in those regions is also expected to be higher. In Latin America, for example, increases after inflation will average 1 per cent - the lowest globally.
 
Once again, the survey's highest pay rises are being forecast by companies in Venezuela.  Employers there are predicting 26 per cent pay rises for staff next year on average. However, that figure trails well behind inflation forecasts: the IMF is predicting 38 per cent inflation in Venezuela next year, leaving employees there facing a spending power reduction of 12 per cent in real terms.
 
While employees in Argentina are set to see the second highest salary increases next year they are not likely to experience much of an uplift in real terms - most independent analysts are putting inflation there at around 25 per cent  which is well above the official 11.4 per cent figure.
 
Companies operating in Mainland China are predicting salary increases of 8 per cent in 2014. Allowing for inflation, Chinese workers will see a 5 per cent increase in real terms – the highest in Asia and among the highest worldwide.  
 
"The on-going need to attract and retain skilled workers who are in short supply in China, is driving up wage increments there to among the highest levels in our survey. Over time, this trend may significantly narrow the traditional salary gap between China and Singapore," said Kilfedder. “Our recent global research on buying power around the world also suggested that Chinese executives could even be better off than their United States counterparts by 2017 if the current trends continue. At present, salaries in China are increasing at more than double the pace of salaries in the United States."
 
In both the US and Canada, companies are predicting 3 per cent wage increases, while those in Europe are forecasting 3.5 per cent rises next year. Companies in Australia are forecasting 4 per cent increases for their staff in 2014 while employees in the Middle East are set to see an average uplift of 4.8 per cent. Companies in South Africa are forecasting 7% wage rises for their staff.
 
Factoring in inflation, employees in Asia are likely to receive the biggest average increases in real terms.
 

Nominal salary increase forecast rankings for Europe

Country

Regional rank 2014

Global rank 2014

Ukraine
1
11
Russia
1
11
Turkey
3
16
Romania
4
23
Bulgaria
5
33
Poland
6
38
Hungary
6
38
Slovakia
8
42
Italy
9
45
Netherlands
9
45
Sweden
9
45
Austria
9
45
Germany
9
45
Norway
9
45
Czech Republic
9
45
United Kingdom
9
45
Finland
17
55
Belgium
18
56
France
18
56
Denmark
20
58
Spain
21
59
Portugal
22
61
Irish Republic
22
61
Greece
24
63
Switzerland
24
63

 

'Real' salary increase forecast rankings for Europe

Country

Regional rank 2014

Global rank 2014

Ukraine
1
2
Bulgaria
2
10
Greece
3
15
Russia
4
16
Turkey
5
18
Romania
5
18
Poland
7
22
Switzerland
8
27
Italy
9
32
Netherlands
9
32
Belgium
11
35
Slovakia
12
36
Sweden
13
43
France
14
45
Portugal
15
46
Austria
16
47
Germany
16
47
Norway
16
47
Czech Republic
16
47
Irish Republic
20
53
Hungary
21
54
Spain
21
54
Denmark
23
59
United Kingdom
24
60
Finland
25
61

 
'Real terms' refers to wages that have been adjusted for inflation. Forecast inflation rates are based on information from the International Monetary Fund.
 
- ENDS -
 

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

 
Recognised since 1971 as a world authority in its field, ECA is a leader in the provision of knowledge, information and technology to inform, guide and support managers handling compensation and benefits for international workers moving around the world. ECA offers organisations of all sizes an unrivalled portfolio of data, calculation aids, salary management software, reports, guides, surveys and consultancy to help them structure and manage their international rewards programmes for long-term, short-term and permanent moves.
 
Follow ECA on twitter: @ECAintl
 
 

About ECA's Salary Trends Survey

 
The information above was taken from ECA's Salary Trends Survey 2013/2014. 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 316 multinational companies for 64 countries. 120 companies operating in the UK provided data on their staff based there. Reports are available free to all participants or for purchase either as a set or individually per country for non-participants from ECA's online shop. Information regarding ECA surveys can 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 October 2013. The survey included data from all seniorities across the following industry groups which included Petrochemicals & mining; Chemical & pharmaceutical; Transport & logistics; Manufacturing & consumer goods; Legal & professional services; Engineering & technology; Retail, leisure & other services; Banking & insurance; Non-Profit.

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