Average pay in the European Union is predicted to increase by 1 to 2.8 percentage points above inflation. The highest pay increase in 2004 is expected to be in Greece, at 5 per cent. However, inflation here is likely to be relatively high too, at 3.5 per cent. Employees in Italy, Ireland, and Portugal are also predicted to receive large pay rises of 4.5 per cent, 4.4 per cent, and 4.4 per cent respectively, while inflation is forecast to be 1.9 per cent, 3.2 per cent, and 2.2 per cent. These are the main conclusions of Mercer’s Global Compensation Planning Report.
In the UK, pay is predicted to increase by 3.6 per cent and inflation is likely to be 2.5 per cent. Switzerland is expected to have the lowest pay growth, at 1.9 per cent, with inflation forecast to be 0.7 per cent.
“Most organisations are reluctant to commit to high pay increases,” said Mark Sullivan, European partner at Mercer. ‘Though there is some optimism that the economy will pick up, employers want to keep the lid on fixed costs – including base pay.”
Predicted pay rises in some Eastern European countries are amongst the highest in the world. Next year, employees in Romania and Russia can expect to receive pay increases of 15.6 per cent and 14.4 per cent, respectively. However, inflation is also expected to be high in these countries, at 13.1 per cent and 10.7 per cent. Those working in Bulgaria and Lithuania will be better off as pay increases are predicted to be 9 per cent and 6.1 per cent, respectively, and inflation 3.9 per cent and 1 per cent.
By contrast, pay increases are likely to equal inflation in Slovakia, at 7 per cent, while inflation is forecast to outpace pay rises by 1 percentage point in Estonia.
Mercer’s Global Compensation Planning Report examines economic, employment and pay trends in over 60 countries worldwide. Data on projected pay comes from a survey of multinational companies, while inflation data is mostly collected from the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).
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