Global Pay Survey Finds Companies Worldwide Poised To Compete For Talent

Salaries are predicted to rise by an average 5.9 percent worldwide next year, or nearly 2 percent above inflation, an early indicator that companies are preparing for a global competition for top talent.

While the average pay in nearly two-thirds (63%) of the 60 countries — including the United States — surveyed by Mercer Human Resource Consulting is forecast to rise between 1 and 3.5 percent above inflation, the consulting firm’s global pay report reveals interesting differences in pay and inflation trends around the world.

“Pay increases tend to vary significantly around the world, depending on country-specific factors such as inflation, economic growth, and unemployment,” says Steve Gross, a world partner for Mercer and global leader of its broad-based rewards consulting practice.

“Global companies need to be especially aware of these key economic and labor market differences when setting compensation budgets and deciding how to allocate resources to generate the greatest return on their rewards investment,” he adds.

Despite continued economic growth in the United States and Canada, wage inflation remains stable, with salaries in both countries likely to increase by 3.7% next year.

However, with inflation at 2.4% and 2% in the United States and Canada, respectively, Canadian employees will fare better overall. In Mexico, salaries are predicted to rise by 4.5%, with inflation at 3.7%.

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“Since the dot-com bubble burst around four years ago, base pay in the United States has remained fairly stable,” says Gross. “Employers continue to be reluctant to increase their fixed-pay costs, preferring instead to use variable pay to reward their employees.”

But Gross also cautions that applying one standard approach to compensation can hurt the motivation of exceptionally high-performing employees, while at the same time reward those who really need to step up their contribution to the workforce.

“To make the most of their base pay budgets, employers should consider segmenting their workforce — not just into high, middle, and low performers, but also by geography, career level, or function,” Gross advises.

“Defining each employee segment based on its contribution to business success enables organizations to reward staff appropriately, as they can apply premium, standard, or discounted pay levels to the various groups,” he adds.