A new survey from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc, reveals that most employees around the world received pay increases in 2014 and can expect to receive comparable increases in 2015.
According to Aon Hewitt's 2014 Global Salary Increase Survey of 12,690 employers in 110 countries, employees in Africa are expected to see the highest rate of increase in 2015 at 8.0%, up from 7.4% in 2014. Conversely, workers in North America can expect to see the lowest salary increases at 3.0%, up from 2.9% in 2014.
“This year, improved GDP projections and lower unemployment rates for most countries meant good news for many employees around the world,” said Yanina Koliren, global compensation surveys and solutions leader at Aon Hewitt. “Employers are competing aggressively for talent, particularly in some regions of the world, and they recognize pay is a key factor in attracting and retaining top employees.”
Key Highlights by Region
• Africa – In 2014, employees in Africa received 7.4% salary increases and can expect to see salary increases of 8.0% in 2015. According to Aon Hewitt, the high rate of increases reflects mainly the impact of inflation, the challenge of finding skilled employees in the region, as well as employers looking for ways to attract and retain top talent.
• Asia Pacific – In 2014, salaries for employees in Asia Pacific rose 5.2%. Specifically, in China, annual salary increases are still quite high (7.9%); however compared with previous years, the speed of salary growth is declining. Overall, employees are expected to see salary increases inch up to 5.8% in 2015, as major countries in the region see the better economic performance of 2014 continuing into 2015. Employee turnover also showed a slight uptick, and companies have adjusted their compensation budgets accordingly.
• Europe – Employees across Europe received salary increases of 3.6% this year and can expect to see similar increases (3.7%) in 2015, though the rate of increase varies by country. For example, Russia and Ukraine salary budget increases are expected to be 8.0% to 8.2% in 2015. In stark contrast, budget increases in Greece are expected to be just 1.9%. Despite the fluctuation, salary budgets in almost every country across Europe are forecasted to rise above inflation in 2015, which may reflect the anticipated strength of a European economic recovery next year and the need for organizations in this region to retain talent.
• Latin America – Companies in Latin America took a conservative approach to salary budgeting this year, and that strategy was reflected in workers' salary increases. Employees in Latin America received average salary increases of 5.5% in 2014 and can expect to see slightly higher salary increases in 2015 (5.9%). Salaries across the region are slightly above inflation rates, with the exception of Argentina and Venezuela, where high inflation remains an issue. Employers also continue to focus on merit increases, as they try to retain and recognize top talent.
• Middle East (Gulf Countries) – Employees in the Middle East received 4.9% salary increases in 2014. In this region, organizations' salary budgets are typically aligned with increases in gross domestic product (GDP). With GDP expected to grow in 2015, Aon Hewitt anticipates workers will see salary increases follow (5.1% in 2015).
• North America – Workers in the U.S. and Canada received average salary increases of 2.9% in 2014. In 2015, increases are projected to be 3.0%, which is the largest increase since 2008. In this region, most companies continue to reserve the majority of their compensation budgets towards variable pay programs, or performance-based awards that must be re-earned each year. In 2014, companies allocated 12.7% of their payroll funds toward variable pay.