- Record real-terms salary decrease is a result of 9.1 percent annual average inflation, the highest in 40 years.
- An unprecedented nominal salary increase of five percent is forecast for UK workers in 2023, though businesses will fail to keep up with soaring inflation.
- The UK lags behind as countries across Europe and globally are forecast to see an improvement in real-terms salary next year (-1.5 percent and -0.5 percent respectively, on average).
- Majority of the world experienced a real-terms salary decrease this year (78 percent globally, 100 percent in Europe), and many are expected to again next year too (37 percent globally, 76 percent in Europe).
UK employees have experienced the biggest hit to real salaries since ECA’s Salary Trends survey launched in 2000. Despite a 3.5 percent nominal pay increase this year, real-terms salaries in the UK decreased by -5.6 percent, due to 9.1 percent average inflation, according to the latest Salary Trends Report by ECA International (ECA).
Oliver Browne, Remuneration Manager at ECA International, explained: “Businesses surveyed have forecasted a record-high nominal salary increase for UK workers next year at five percent, but this will fail to keep pace with the high inflation that resulted in the highest real-terms salary decrease on record. In the 22 years that ECA has conducted this report, UK workers received a -2.1 percent real-terms salary decrease back in 2009 during the financial crash, second still to this year.”
While the UK fared better than the European average for real-terms salary decreases in 2022 (-6.4 percent), it is forecast to fare far worse in 2023 by comparison (-4.0 percent vs -2.1 percent respectively).
Browne adds: “Although every country surveyed in Europe reported a real-terms salary decrease this year, many European countries are expected to weather the inflation storm a little better than the UK, which continues to struggle with a less optimistic outlook for the year ahead. In fact, some are forecast to receive a real-terms salary increase next year, including Switzerland at 0.1 percent, Greece 0.3 percent and Bulgaria 0.8 percent.”
ECA surveys 365 multinational companies in 68 countries worldwide to discover forecasted salary increases for the forthcoming year and the actual increases reported for the current year. Reviewing the salary increases against inflation, ECA reports on the real-terms salary increases for locally employed staff around the world.
Browne comments: “Our survey indicates another tough year for workers globally in 2023, only around a third (37 percent) of the countries surveyed are forecast to see a real-terms salary increase, though this is better than the 22 percent that experienced increases this year. India will see the biggest increase of 4.6 percent, followed by Vietnam (4.0 percent) and China (3.8 percent).
“While employees in the US saw a real-terms salary decrease of -4.5 percent in 2022, with inflation at 8.1 percent, the strength of the dollar, an active Federal Reserve, and a relative independence in energy supplies, inflation is forecast to drop to 3.5 percent next year. With the average nominal salary expected to increase by 4.5 percent, workers will see a real-terms increase of 1.0 percent.”
Bottom five forecasted real-salary decreases globally in 2023
Country | Salary Increase | IMF Inflation | Real-terms Salary Change |
|---|---|---|---|
Pakistan | 10.0% | 19.9% | -9.9% |
Ghana | 9.0% | 20.9% | -11.9% |
Turkey | 36.8% | 51.2% | -14.4% |
Sri Lanka | 9.0% | 29.5% | -20.5% |
Argentina | 50.0% | 76.1% | -26.1% |
Top five forecasted real-salary increases globally in 2023
Country | Salary Increase | IMF Inflation | Real-terms Salary Change |
|---|---|---|---|
India | 9.7% | 5.1% | 4.6% |
Vietnam | 7.9% | 3.9% | 4.0% |
China | 6.0% | 2.2% | 3.8% |
Brazil | 8.1% | 4.7% | 3.4% |
Saudi Arabia | 4.5% | 2.2% | 2.3% |
“By comparison, the situation in Asia has been relatively stable as the region has been shielded from the worst of the inflation impacting much of the rest of the world. On average salaries increased by 0.3% in real terms across the region. Employees in China saw real-terms salaries increase 3.7 percent and Hong Kong 1.6 percent,” continues Browne.
“That being said, there are a few countries where people saw a significant decline in their purchasing power. This trend was most pronounced in Sri Lanka where economic turmoil has led to exceptionally high rates of inflation, which saw those lucky enough to keep their jobs lose more than 40% of their buying power. Generally speaking, however, stability is expected to continue across Asia in 2023, as real-terms salaries in China are forecast to increase by 3.8 percent, and 1.6 again for Hong Kong.”
For more information visit www.eca-international.com.
-Ends-
Notes to Editors:
Ema Boccagni, Commercial Director at ECA International, is available for interview.
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About ECA’s Salary Trends Survey
The information above was taken from ECA’s Salary Trends Survey 2022/2023, with inflation rates used from IMF’s annual report released in October 2022. 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 over 360 multinational companies in 68 countries. Reports are available free to all participants or for purchase either as a set or individually per country for non-participants from the ECA website.
The forecast average real salary increase in a country is calculated by looking at the predicted average nominal salary percentage increase (i.e. the salary increase given to employees by their employers) and subtracting the forecast inflation. E.g. if the average nominal salary increase in a country is 4% and inflation is at 2.1%, this would result in an average real salary increase of 1.9% (4%-2.1%=1.9%).
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 in August and September 2022. The survey included data from all seniorities across the following industry groups which included Energy, mining & petrochemicals; Chemical & pharmaceutical; Transport & logistics; Manufacturing & consumer goods; Legal & professional services; Engineering & technology; Retail, leisure & other services; Financial services; Non-profit.
About ECA International (www.eca-international.com)
ECA International is the market-leading provider of knowledge, information and technology that enables businesses to manage their international reward programmes.
Partnering with thousands of clients on every continent, we provide a fully-integrated suite of quality data, specialist software, consultancy and training. Our unparalleled insights guide clients as they mobilise their most valuable resource: people.
We make the complex world of international mobility simple, providing clients with the expertise and support they need to make the right decisions – every time.
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