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Australian workers can expect only modest pay rises next year while high growth markets in nearby Asia will see wages increase by up to three times that of their Western neighbours, according to the latest pay forecast data by global management consultancy, Hay Group.
With varied Australian business performance across sectors especially the decrease of the resources sector, pay forecast rates are becoming more differentiated for individual sectors and specific roles.
In Australia, pay overall will rise by an average of just four per cent in 2013, whereas in growth markets including Vietnam (12.8%), Indonesia (10.6%), India (10.5%), the Philippines (8%) and Malaysia (6.2 %) wages are expected to increase rapidly. While in China, workers can expect wage hikes of 9.5 % as the intensifying ‘war for talent' continues despite slowing economic growth (up 1.1% on last year).
Interestingly, pay rises in the second generation of high growth Asian economies are outstripping those of their colleagues in the region's more developed countries. For example, in Japan, wages will increase by just 2% next year.
Steve Paola, Senior Consultant at Hay Group, said Australian organisations are facing an increased threat from maturing markets in nearby Asia, due to slowing growth rates.
"With strong economic growth in Asia translating into need for talent and rocketing wage hikes, local organisations may struggle to keep their most talented employees in the country as they are increasingly being enticed to work for companies located in buoyant Asian markets.
"As a result, Australian businesses need to ensure they have reward strategies in place that deliver strong incentives for their current and future employees enabling them to retain high performing staff despite modest pay increase forecasts.
"Ensuring local talent is retained through providing growth and development opportunities and an engaging work environment are important non-financial retention strategies."
According to Hay Group's research, salaries in developed Western economies will experience the smallest increases in 2013, as GDP growth remains broadly flat.
Across North America, pay will rise by 2.9% – the lowest of any global region – and in Europe, crisis-weary companies in Greece and Ireland will not raise pay next year, against a subdued regional average of 3.3%. Increases in Germany, the UK (both 3%) and France (2.6%) will also be subdued and across the region the pay rises on offer are lower than in 2012 when the average pay rise was 5.5%.
"It's no secret that employees in developed markets face a tough year ahead with small wage increases however despite the weak outlook there is an upside for Australian workers as it is predicted they will receive higher pay rises than most of their Western counterparts," said Paola.
Latin America will experience the highest overall rise in salaries next year (9% on average), with Venezuelan workers set to see wages jump by a colossal 29% – driven largely by high inflation.
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