Real wages in the UK and US are projected to rise by a third by 2030. However, in India they are expected to quadruple and in the Philippines grow threefold, the study found.
The analysis is based on estimates of average monthly wage levels from the International Labour Organisation (ILO) and projected forward to 2030 using results from PwC's World in 2050 report.
PwC said it's "striking" how much the wage gap could close by 2030. India's current average monthly wage is about 25 times smaller than in the UK, but by 2030 the difference is likely to be only 7.5 times smaller – representing a "huge relative economic shift".
PwC chief economist John Hawksworth said even though such projections are subject to "significant uncertainties" the direction of change is clear.
"The large wage advantages enjoyed today by many emerging economies will shrink as their productivity levels catch up with those in advanced economies and their real exchange rates rise as a consequence," Hawksworth said.
"Places like Turkey, Poland, China and Mexico will, therefore, become more valuable as consumer markets, while low cost production could shift to other locations such as the Philippines. India could also gain from this shift, but only if it improves its infrastructure, female education levels and cuts red tape."
The study showed average wages in US are 7.5 times greater than Mexico and this gap could close to less than 4 times by 2030. Over the same period, the average monthly Chinese wage could rise to around half that of Spain.
The study has predicted these trends could have implications for business strategy:
- Companies could begin re-shoring their manufacturing or service operations, as some US companies have already started to do, or else move them to cheaper locations.
- As current large cost advantages decline, companies move to locations that are initially more expensive but closer to home, gaining more control over supply chains to respond to customers' changing needs and demands.
- Middle income economies Turkey, Poland and China begin offshoring to relatively cheaper economies like Vietnam, India and the Philippines.
- Current offshore markets (such as China and India) reorient their operations to sell their goods and services to increasingly affluent local populations.
PwC predicts many UK companies' current offshore operations will not survive the changes in relative wages, but an existing base in a fast-rising market should not be given up lightly.
Far-sighted companies are already building talent pipelines in the countries in which they may one day be headquartered, PwC said.
