Worldwide pay survey for 2008

Australians can expect relatively modest salary increases next year of 4% and 3.9%, compared to a 6% rise for salaries globally, according to Mercer’s Worldwide Pay Survey.

Despite all that is said about the skills shortage and pay pressure, Australian pay rises pale in comparison to India, where salaries are predicted to grow by 14.1%, nearly 10% above local inflation.

Nevertheless, the rises will beat inflation, expected to be around 2.5%. Rob Knox, head of Mercer’s information products business for the Asia Pacific region, says the gap in Australia between pay movements and projected inflation has steadily increased.

“Twelve months ago the gap was about 1% while now it is 1.5%. However, there are sustained upward pressures on inflation and so the gap between pay increases and inflation is expected to remain fairly tight over the coming 12 months.”

Movements in pay are not consistent across the country. Pay movements in Western Australia for the past 12 months were 5.6% while in South Australia the corresponding figure was 5%.

Engineers engaged on major infrastructure projects, for instance, have typically received pay adjustments well above the national average. Pay increases in the range of 8% are not uncommon.

“Low unemployment, skill shortages, and a relatively positive economic outlook are all factors contributing to an expectation of increased pressures on salary movements,” Knox says.

Global salaries are expected to rise by an average of 6% in 2008 – 1.9% above inflation.

By contrast, pay rises in North America and Western Europe are more modest. British pay is projected to increase by 3.1%, 1.1% above inflation. Projected salary increases remain fairly consistent across Western Europe, with actual increases averaging 3.4% and increases above inflation averaging 1.3%.

Modest pay increases and inflation rates are forecast for next year in both the US and Canada, with average salary increases above inflation expected at 1.9% in the US and at 1.8% in Canada.