A forecast issued this week by Korn Ferry suggests that, adjusted for inflation, real-wage salaries globally are expected to grow only an average of 1.0 percent in 2019. This is down from a 1.5 percent prediction for 2018.
“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.”
In the United States, an average 3 percent pay increase is predicted, which is the same as last year and the year before. Adjusted for the expected 2.4 percent inflation rate in 2019, the real wage increase is forecast to be 0.6 percent, down from last year’s 1.0 percent.
Korn Ferry’s expectation seem to be backed up by a similar report issues by Willis Towers Watson in August of 2018.
Their 2018 General Industry Salary Budget Survey found U.S. employers project to give exempt, non-management employees (i.e., professional) average pay increases of 3.1% in 2019, compared with 3.0 in 2018. Nonexempt hourly employees can also expect larger increases in 2019 — 3.0% in 2019 versus 2.9% in 2018. Employers are planning smaller increases for executives (3.1% versus 3.2%), while steady increases are planned for management employees (3.1%) and nonexempt, salaried employees (3.0%). Only 3% of companies plan to freeze salaries next year. Pay raises have hovered around 3% for the past decade. In 2017 employers provided significantly larger increases was 2008 (3.8%).
The Willis Towers Watson survey also found companies continue to reward their “star” performers with significantly larger pay raises than average performing employees. Employees receiving the highest possible rating were granted an average increase of 4.6% in 2018, 70% higher than the 2.7% increase granted to those receiving an average rating.
“After a decade of consistently flat pay raises, we are witnessing a slight uptick as companies are feeling pressure to boost salaries, given the low unemployment rate and the best job market in many years,” said Sandra McLellan, North America Rewards business leader at Willis Towers Watson. “While companies have been able to hold the line on raises, the tides are changing. Many companies are establishing slightly larger salary budgets while at the same time focusing on variable pay such as annual incentives and discretionary bonuses to recognize and reward their best performers.”