×

Western wages surge, but Venezuelan pay to sink 50%

Workers in Europe and North America are set to get more in their pay packets next year as their countries benefit from zero bound inflation rates and a recovering economic picture, pushing their wages up the most in three years, according to a global salary survey.

But in Venezuela, where tumbling commodity prices and the world's highest inflation have rendered the economy on the brink of default, employees will likely see their real wages cut by over 50 percent.

An employee at a restaurant counts bolivar notes in a photograph taken in Caracas, Venezuela.
Meridith Kohut | Bloomberg | Getty Images
An employee at a restaurant counts bolivar notes in a photograph taken in Caracas, Venezuela.

On average, workers around the world expect to see their pay packets increase by around 2.5 percent in 2016, the highest in three years as pay rises along with historically low inflation to give employee wages a boost, according to data published by advisory firm, Korn Ferry Hay Group.

"Differing macro-economic conditions means there are stark variations globally but overall decent pay increases, coupled with extremely low (and in some cases, zero) inflation, mean that the outlook is positive for workers," said global managing director for productized services at Hay Group, Philip Spriet said.

But in Latin America, the outlook for workers in the region looks bleak.

Venezuela is set to suffer the most significant cut in real income across the globe. Salary increases are high at 70 percent according to the report, but when predicted inflation is factored in (122.6 percent), employees can expect real wage cuts of over 52 percent.

The country's economy is closely linked to the price of oil - which accounts for more than 90 percent of the country's export revenues. As prices tumbled in the last year or so - from around $120 last summer to $40 in recent months -- the country's growth got hit.

The International Monetary Fund (IMF) predicts that the economy will contract 10 percent this year and a further 6 percent in 2016.

In Asia, real wages are expected to rise by 4.2 percent – the highest globally. The largest real wage increases are forecast in Vietnam , China and Thailand.

Despite China's economic slowdown, coupled with plummeting stock markets and reduced exports, workers in the country are set to see an 8 percent salary boost in 2016 as the middle class continues to grow and demand for skilled workers climbs.

In the Middle East and Africa , relatively low inflation has offset the effects of the low oil price and political turmoil, giving workers real wage increases of 3.8 percent and 1.6 percent, respectively.

"Asia continues to drive growth in wages globally as companies look set to increase wages. However, the global labor market is in flux as the aging workforce in advanced economies begins to take hold. In emerging economies, upskilling workers is crucial for companies to maintain competitive advantage and those skilled employees can expect to see wages rise as talent shortages in certain regions drives salaries up," Spriet added.