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Chinese workers to receive the second highest global ‘real’ wage increases in 2016

  • Salaries forecast to rise 8 per cent in 2016 and 6.2 per cent above inflation
  • China up 4 places in global rankings from 2015

Chinese workers are expected to see their salaries increase by 8 per cent overall and by 6.2 per cent above the rate of inflation in 2016, 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.

Employees based in Chinese cities Beijing, Guangzhou and Shanghai are all predicted to receive 8 per cent nominal salary increases in 2016, the same as they were awarded on average in 2015. Workers in Shenzhen are also predicted to receive 8 per cent next year, more than their 7.9 per cent increases this year.

The average real* wage increases of 6.2 per cent forecast for Chinese staff in 2016 are considerably higher than the global average forecast of 1.7 per cent. These high salary increases place China second in the ‘Global real wage increase’ rankings for 2016, up 4 places from 2015, despite being slightly lower than the 6.3 per cent increases seen in 2015.

The slowdown in the Chinese economy does not seem to be having a direct impact on employee salaries just yet. The demand for talent in China is incredibly competitive owing to the skills shortages which still exist in many locations and many industries. The fact that companies will continue to offer inflation-busting salary increases at the same rates as in years of more robust economic growth suggests that the need to attract and retain staff is still a key challenge for many employers in China.

- Lee Quane, Regional Director – Asia, ECA International

ECA's Salary Trends Survey reports current and projected salary increases for local employees. It provides information on real pay rises by factoring in inflation rates. This year, it is based on information collected from 336 multinational companies across 70 countries and regions. 153 companies provided data on their China-based staff for the 2015/16 survey.

Survey highlights – Asia

In general, the real wage increase in Asia is expected to be marginally lower than in 2015, with a decrease from 3.7 per cent in 2015, to 3.1 per cent in 2016.

Hong Kongers will see their salaries increase by an average of 4.5 per cent again in 2016. However, after inflation is taken into account, real wage increases will amount to just 1.5 per cent on average next year. This is the third lowest ‘real’ salary increase in the Asia region, only bettering Macau and Myanmar. Workers based in Taiwan could see their real wage increases amount to 3 per cent in 2016, bettering both Hong Kong’s 1.5 per cent and Singapore’s 2.2 per cent.

Pakistan has seen the biggest forecasted salary increase in the region. Companies there are anticipating 10.5 per cent rises on average. However, once inflation is taken into account Pakistan falls to third place in the regional and global rankings. In terms of ‘real’ salary increases, i.e. once inflation has been factored in, it is staff in Vietnam that will experience the highest regional and global real wage increase in 2016 of 7 per cent.

Employees in Japan will see the region’s lowest wage rise next year. After a short period of inflation in Japan, the IMF is predicting a renewal of the trend towards deflation throughout 2016. It appears that the government’s efforts to raise wages in recent years, to encourage spending, may not be sustainable and Japan should continue to see small salary increases.

Global markets

According to company predictions from around the globe, wages will rise 5.1 per cent on average in 2016, slightly up on this year’s 5 per cent average. In terms of real salary increases, the global average is forecasted to be 1.7 per cent, which is similar to last year’s average of 1.5 per cent.

Companies in Venezuela are forecasting the survey's highest nominal pay rises in 2016. Employers there are predicting 60 per cent pay rises for staff next year on average. However, once inflation of over 204 per cent has been factored in, employees will actually experience the largest global decrease in spending power in 2016.

The lowest forecasted nominal salary increase is expected in Greece in 2016, companies here anticipate a 1.5 per cent increase compared with Europe’s 2.8 per cent average. There are no particular surprises with Greece’s inclusion here with their well-publicised sovereign debt crisis. In 2016, real wage rises are expected to average 1.4 per cent in Europe, which is actually a decrease from 2015’s 2 per cent average increases. Romania is forecasted to have the largest real salary increase in Europe, ranked 5th in the global rankings with an expected increase of 4.7 per cent. Although the forecast of 0.2 per cent deflation for 2016 is a concern, the country continues to reap dividends from the economic openness provided by previous reforms, and notable progress has been made with curtailing political corruption.

Forecasts for 2016 salary increases in Ukraine fall below the expected rate of inflation; a real-terms wage decrease is therefore predicted, at -4.2 per cent. The Ukrainian revolution and subsequent Russian invasion created economic turmoil and forced the Ukrainian government to greatly devalue the hryvnia. The weaker currency immediately inflated import prices and added to product shortages, resulting in a rapid inflation-rate rise to more than 50 per cent in 2015. Although likely to remain elevated, inflation is nevertheless expected to decline significantly in 2016, reducing upward pressure on wages.

In the US and Canada, companies are predicting 3 per cent wage increases – the same as this year’s uplifts. Staff in Australia can expect to receive 3.5 per cent uplifts in 2016 while employees in the Middle East are set to see wages rise 5 per cent on average.

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

Nominal and real salary increase forecast rankings for Asia
Countries Asia rank nominal salary increases 2016 Asia rank after inflation (real wage increase) 2016 Global rank  nominal salary increases 2016 Global rank real wage increase 2016
Pakistan 1 3 4 3
Bangladesh 2 8 5 9
India 2 5 5 6
Vietnam 2 1 5 1
Indonesia 5 7 11 8
Sri Lanka 6 4 12 4
China 7 2 14 2
Myanmar 8 17 18 68
Philippines 9 10 21 11
Malaysia 10 14 24 29
Thailand 10 6 24 7
Korea Republic 12 9 26 10
Macau 12 16 26 63
Hong Kong 14 15 36 34
Singapore 15 12 39 20
Taiwan 15 11 39 12
Japan 17 13 62 24
Nominal and real salary increase forecast rankings - Global top 20
Countries Global rank nominal salary increase 2016 Global rank real salary increase 2016
Venezuela 1 70
Argentina 2 17
Ghana 3 69
Pakistan 4 3
Vietnam 5 1
India 5 6
Bangladesh 5 9
Egypt 5 44
Ukraine 5 67
Nigeria 10 64
Indonesia 11 8
Sri Lanka 12 4
Russia 12 65
China 14 2
Kenya 14 21
Brazil 14 31
Turkey 14 52
Myanmar 18 68
Kazakhstan 19 66
South Africa 20 55

-ENDS-

Notes to Editors

◾Venezuela and Argentina have been excluded from global averages as they skew the average; their reported salary increases were 60 per cent and 28 per cent respectively.
◾Ukraine has been omitted from the European average as the 2015 real wage decrease of -41.4% skews the average.

About ECA International

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.

About ECA's Salary Trends Survey

The information above was taken from ECA's Salary Trends Survey 2015/2016. 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 336 multinational companies for 70 countries. 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 September 2015. 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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