- Businesses in the UK expect to repeat an historic 5% nominal pay increase in 2024
- UK inflation is forecast to fall to the lowest rate since 2021 at 3.7%, leading to the first real salary increase in four years (1.6% in 2020)
- 1.3% real salary increase equates to approximately £447 a year for the average £34,372 annual salary*
- Europe continues to trail other regions globally for real salary increases, forecasting less than half of the 2.2% increase anticipated for employees in Asia in 2024
UK salaries are forecast to increase by 1.3% in 2024 in real terms as UK businesses expect to repeat a higher than usual nominal pay increase of 5%, according to the latest annual Salary Trends Report by global mobility expert, ECA International (ECA). This equates to an average salary boost of £447 - the highest real-terms increase since the 1.7% received in 2020 – should inflation drop to 3.7% as anticipated.
The UK ranks 28th globally and 7th in Europe for real-terms salary increases forecasted next year, outpacing the expected average global rise of 1.0%.
ECA has conducted its Salary Trends Report for 23 years and analyses data from over 360 multinational companies in 68 countries. Real salary increases are calculated by subtracting the relevant inflation percentage from the nominal salary percentage increase forecasted by businesses in each country**.
Oliver Browne, Remuneration and Policy Surveys Manager at ECA International, explained: “UK workers have had a difficult few years, with the economic impact of the Covid-19 pandemic immediately followed by the surge in inflation after Russia's invasion of Ukraine wiping out any real-terms gains of their pay increases. Now that inflation is finally expected to fall below 4%, employees in the UK should be able to look forward to their first real-terms pay increase since 2020.”
While inflation in the UK is falling more slowly than the likes of Germany, Switzerland and Italy, the nominal salary increase forecasted by businesses in the UK is higher, causing the UK to overtake them in rank for real salary increases next year. Real salaries in the UK are anticipated to outperform those in many other European countries, rising 0.4% higher than the 0.9% European average.
Browne added: “With inflation so high, many businesses in the UK have been unable to offer their employees pay awards to match. Nominal increases are expected to remain higher than usual next year despite falling inflation, suggesting some companies may instead be spreading larger increases over a longer period.”
Despite falling rates of inflation, Europe is expected to continue to trail behind the rest of the world for real-terms pay increases at 0.9% on average, compared to Asia-Pacific’s forecasted 2.2% average increase. Employees in Europe are forecast to receive the lowest global nominal pay increase on average next year.
UK employees received better-than-expected real-terms pay awards this year
In real terms, UK salaries fell by 1.3% less than the 4% drop forecasted for 2023 (-2.7%). This is a result of lower than expected inflation of 7.7% compared to the 9% forecasted, while UK businesses implemented a 5% average nominal salary increase – the highest since ECA’s survey began 23 years ago.
However, inflation in the UK remained significantly higher than the European average of 6%, causing employees in the UK to experience a worse real-terms salary decrease than the region’s average of -1.9%.
Employees in Asia receive highest real-terms pay rise as region dominates top ten
Asia enjoyed the highest average real-terms pay increase globally this year of 1.8% and is forecast to have the highest again next year with a 2.2% rise, helped by the region experiencing the lowest rate of inflation at a predicted 3.0%.
Asia-Pacific countries continue to dominate the top global salary increases forecast for next year, with nine out of the top 12 countries located in this region.
Browne said: “Asian countries have been comparatively less affected by the spikes in inflation witnessed elsewhere, with particularly low inflation in China having a knock-on effect in many other countries in the region. As a result, despite not seeing the highest nominal salary increases in the world, the real-terms effect is greater.”
Top five forecasted real-terms salary increases globally in 2024
|
Country
|
Nominal Salary Increase
|
IMF Inflation
|
Real-terms Salary Change
|
|
India
|
9.7%
|
4.6%
|
5.1%
|
|
Indonesia
|
6.8%
|
2.5%
|
4.3%
|
|
China
|
5.8%
|
1.7%
|
4.1%
|
|
Vietnam
|
7.0%
|
3.4%
|
3.6%
|
|
Thailand
|
5.0%
|
1.6%
|
3.4%
|
Five largest real-terms salary decreases forecasted globally for 2024
|
Country
|
Nominal Salary Increase
|
IMF Inflation
|
Real-terms Salary Change
|
|
Nigeria
|
12.3%
|
23.0%
|
-10.7%
|
|
Pakistan
|
11.0%
|
23.6%
|
-12.6%
|
|
Egypt
|
13.0%
|
32.2%
|
-19.2%
|
|
Argentina
|
73.7%
|
93.7%
|
-20.0%
|
|
Turkey
|
35.0%
|
62.5%
|
-27.5%
|
-ENDS-
Notes to Editors
Oliver Browne, Remuneration and Policy Surveys Manager at ECA International, is available for interview.
*According to latest ONS weekly wage data.
**About ECA’s Salary Trends Survey
The information above was taken from ECA's Salary Trends Survey 2023/2024, with inflation rates used from the IMF World Economic Overview released in October 2023. 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 over 360 multinational companies in 68 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.
The forecast average real salary increase in a country is calculated by looking at the predicted average nominal salary percentage increase (i.e., the salary increase given to employees by their employers) and subtracting the forecast inflation. E.g., if the average nominal salary increase in a country is 4% and inflation is at 2.1%, this would result in an average real salary increase of 1.9% (4%-2.1%=1.9%).
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 in August and September 2023. 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.
About ECA International
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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