British workers can expect real wage growth of 1.9% in 2017, according to research by Korn Ferry Hay Group.
The researchers predict that wages in the UK will increase by 2.5% next year, despite the economic and business turmoil caused by Brexit. Taking inflation into account, this translates to a real wage growth of 1.9%.
The study, which analysed data from more than 20 million employees across 25,000 organisations in 110 countries, found that workers on the continent will see lower wage increases (on average 2.1%), leaving them with a real wage increase of 1.7%.
In Asia salaries are forecast to increase by 6.1% – down 0.3% from last year and 0.7% from 2014. However, real wages are expected to rise by 4.3% – the highest globally. North America, on the other hand, is predicted to see slower salary increases than other regions, with only a 2.8 % projected increase, the same as last year. Adjusted for inflation, North America's real wage increase is 1.4%.
Ben Frost, global product manager at Korn Ferry Hay Group, suggested UK businesses should be coming up with a plan of action to tackle restrained wage growth and rising living costs, caused by inflation.
“When it comes to pay rises in the New Year workers are still better off in the UK rather than France or Germany,” he said. “But across the Western world, including North America and Australia, we’re entering a new era in pay, characterised by restrained growth coupled with higher inflation.
“Company pay policy is typically slow to react to macro-economic shifts, but right now businesses cannot afford to be complacent. Inflation is going to rise, and companies will be forced to decide what will bear the brunt of this. Do they suppress pay and leave employees out of pocket? Or do they place the squeeze on their own profit margins? It’s a complex problem, because if wages do not increase in line with inflation, companies could risk losing their key talent.”