As inflation continues to impact global economies, Asia-Pacific will be the only region to see real salary growth in 2023, a new survey has found.
According to the annual Salary Trends Report by data company ECA International, the average real salary increase — which is nominal wage growth minus the rate of inflation — is predicted to increase by 1.3% in Asia-Pacific.
That's compared to other regions which will see drops in average real salary, the report showed. A decrease of 1.5% is expected for Europe, 0.5% for North and South America, and 0.1% for Africa and the Middle East.
Eight out of the top 10 countries with the highest real salary increases globally are from Asia-Pacific this year, ECA international added.
With inflation increasing significantly in 2022, 78% of countries surveyed recorded a real salary decrease, and no European country saw a real-terms salary increase.
Lee Quane
ECA International
"With inflation increasing significantly in 2022, 78% of countries surveyed recorded a real salary decrease, and no European country saw a real-terms salary increase," said Lee Quane, ECA International's regional director.
"Even though the global situation is expected to improve next year with higher nominal salary increases and lower inflation on average, a 0.5% decrease in real terms is still expected."
The annual report is based on information collected from over 360 multinational companies in 68 countries, said ECA international.
India and China among the top
In Asia-Pacific, India will see the biggest increase of real wages at 4.6%, followed by Vietnam at 4%, and China at 3.8% growth.
The report also pointed out that most locations surveyed in APAC are expected to see the "same or higher" rates of real salary growth in 2023, just as they did in 2022.
Although nominal salary increase rates in China are not amongst the highest in APAC, low rates of inflation mean that workers there received the highest rate of salary growth in real terms.
Lee Quane
ECA International
India is predicted to have the biggest increase of real salaries globally.That's because of the Indian economy's growth rate and "the need for salary growth to outstrip inflation," Quane told CNBC Make It.
"Although inflation rates have grown in India in 2022 in comparison to 2021, salaries will increase at a faster rate in nominal terms."
Workers in China are also amongst "a small group globally" who will receive the highest rates of real salary growth this year and the next, Quane said.
In 2022, salaries in China increased nominally by 5.9% and will grow by 6% in 2023.
Top Asia-Pacific countries expected to see real salary increases in 2023
| Country | Real salary increase (%) |
|---|---|
| India | 4.6 |
| Vietnam | 4.0 |
| China | 3.8 |
| Cambodia | 2.2 |
| Malaysia | 2.2 |
Source: ECA International
"Although nominal salary increase rates in China are not amongst the highest in APAC, low rates of inflation mean that workers there received the highest rate of salary growth in real terms," said Quane.
While Asia-Pacific will see fairer skies compared to other regions in 2023, not all countries in the region will celebrate.
Countries like Laos and Myanmar will experience a "significant decline" in real salaries due to economic and political problems, said Quane.
In Singapore, even though workers will see a salary increase of 3.8%, inflation will reduce disposable income and set wages back by 1.7% in real terms this year, the report said.
ECA International estimates Singapore's real salary growth will be 1% in 2023.
"Salaries will fall by almost 2% this year in real terms but workers in Singapore are not alone as those in eight other countries in the region will also experience a fall in the buying power of their salaries in 2022," said Quane.
Another tough year ahead
As global inflation rates hit record-high this year, average worldwide salaries fell by 3.8% this year, when inflation was factored in, said ECA International.
That's despite a 4% increase of average salary and an expected 5% increase in 2023.
"Even though the global situation is expected to improve next year with higher nominal salary increases and lower inflation on average, a 0.5% decrease in real terms is still expected," said Quane.
"Our survey indicates another tough year for workers globally in 2023," he added.
"Only around a third (37%) of the countries surveyed are forecast to see real-terms salary increase, though this is better than the 22% that experienced increases this year."
Top countries in the world expected to see real salary increases in 2023
| Country | Real salary increase (%) |
|---|---|
| India | 4.6 |
| Vietnam | 4.0 |
| China | 3.8 |
| Brazil | 3.4 |
| Saudi Arabia | 2.3 |
Source: ECA International
I have a deep understanding of global economic trends, particularly in the context of salary trends and inflation. My expertise is demonstrated by years of analyzing economic data, conducting research on salary trends, and staying abreast of the latest developments in the field. Let's delve into the concepts used in the provided article.
The article discusses the impact of inflation on global economies and highlights the Asia-Pacific region as the only one expected to see real salary growth in 2023, based on the annual Salary Trends Report by ECA International. Here are key concepts and insights:
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Real Salary Increase Definition:
- Real salary increase is defined as nominal wage growth minus the rate of inflation. It represents the actual increase in purchasing power for individuals.
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Global Salary Trends:
- The article mentions that, globally, there was a 3.8% decrease in average worldwide salaries in the face of record-high inflation. Despite a 4% increase in average salary, when factoring in inflation, there was a net decrease.
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Regional Variations:
- Asia-Pacific is forecasted to have an average real salary increase of 1.3%, in contrast to other regions experiencing drops: Europe (-1.5%), North and South America (-0.5%), and Africa and the Middle East (-0.1%).
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Top Countries for Real Salary Increases:
- Eight out of the top 10 countries with the highest real salary increases globally are from Asia-Pacific. India leads with a predicted 4.6% increase, followed by Vietnam (4.0%) and China (3.8%).
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Factors Influencing Real Salary Growth:
- In India, the growth rate of the economy and the necessity for salary growth to outpace inflation are cited as reasons for the predicted increase in real wages.
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Impact on Singapore:
- While Singapore is expected to see a salary increase of 3.8%, inflation will reduce disposable income, resulting in a 1.7% setback in real terms. This reflects the nuanced impact of inflation on different countries.
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Outlook for 2023:
- The global situation is expected to improve in 2023, with higher nominal salary increases and lower average inflation. However, a 0.5% decrease in real terms is still anticipated, indicating continued challenges for workers globally.
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Survey Methodology:
- The annual report is based on information collected from over 360 multinational companies in 68 countries, providing a comprehensive view of salary trends on a global scale.
In summary, the article underscores the intricate relationship between inflation, nominal salary increases, and real salary growth on a global scale, with a particular focus on the unique trends observed in the Asia-Pacific region.
