Real pay increase for workers in the United States will substantially lag those in China, India and Eastern Europe in 2007, according to new research from a global consulting firm.
US administrative, professional and senior management employees are predicted to see real increases of just 1.4 per cent as against increases approaching 8 per cent in high-growth economies, said Philadelphia-based Hay Group that conducts annual research on Most Admired Companies for Fortune magazine.
"Much like their colleagues in Europe, US employees will be seeing relatively modest increases in base salaries when compared to the emerging economies," said Iain Fitzpatrick, general manager of Hay Group's US Reward Information Services.
"Projected 2007 increases are fairly consistent with real increases seen in the US over the past several years," the Group said on Monday announcing the results of its Global Pay Day Analysis based on data in 19 job families across a number of industries in 50 countries.
"The wealth created by rapid, focused economic development is resulting in a pay boom for Chinese and Indian workers, who will enjoy some of the largest real pay increases worldwide in 2007," said Hern Yin Goh, director of Hay Group Reward Information Services in Shanghai.
China tops the tables for each of the three job categories, with a predicted 7.9 per cent increase for administrative workers, 7.8 per cent for professionals and 8.9 per cent for senior management.
High pay increases in India last year — 7.2 per cent across the board — look set to continue into 2007. The country boasts the second highest pay increase predictions for 2007, with increases of 6.2 per cent forecast across the three job levels. Senior managers can anticipate a real increase of 6.9 per cent, professionals and administrators 5.9 per cent each.
"Growing pay packets in Eastern Europe reflect continued economic development in the region," said Scott Marlowe, general manager, Hay Group Czech Republic.
"While wages are growing from a much lower level for manual and administrative workers, pay levels for managers are closer to Western standards," said Marlowe. "The lower cost of living in the East means that as the management pay gap closes, senior managers in Eastern Europe enjoy a significantly greater purchasing power than those in the West — ultimately making them better off."
Senior managers in Bulgaria can expect the largest real pay increases of any in Eastern European, at 7.8 per cent; however administrative workers can expect only 4.3 per cent. Slovakia and Lithuania are expecting average increases in excess of 5.5 per cent. Average salaries in Rumania are forecast to see a real increase of 3.1 per cent.
"Employees in Western Europe will start from a higher base level of pay than those in the East, receiving only incremental real rises in the coming year," said Ben Frost, the Hay Group consultant responsible for the research. "The 'new' economies are experiencing much faster salary growth rates than the established job markets of 'old' Europe, reflecting their position as emerging economies."
"In contrast to Europe and North America, workers across South East Asia are experiencing healthy salary growth in both the more developed economies like Singapore and emerging economies such as Vietnam, due in part to low inflation," said Frost.
Workers in Indonesia and Vietnam will see real increases in excess of 4 per cent, those in Singapore and Malaysia, will see real pay increases exceeding 2.8 per cent and 2.7 per cent respectively.
"While salaries continue to rise, in general, salary increases have been lagging inflation," in the Middle East said Vijay Gandhi, director of Hay Group Reward Information Services, Middle East and North Africa.
"This is causing difficulty for companies struggling to maintain internal equity: companies are offering more competitive salary packages for new hires, particularly in managerial and executive positions, where heightened demand for talent from traditional expatriate markets is outstripping supply," he said.
"The combination of economic instability and a changeable political landscape makes for a mixed salary picture in South America. While emerging economies in Asia are accelerating at a rapid pace, economic growth and salary increases in South America lag behind," said Frost.