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Lower inflation levels will see real term wage growth in 2015

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Management consultancy Hay Group has carried out the research and has found that despite salary forecasts of 2.5 per cent being the same as last year, when combined with lower inflation levels it will mean a 0.8 per cent increase in real income.

With inflation predicted to be set at 1.7 per cent, a “real increase” in wages will happen for only the second time since 2009.

Certain sectors within the UK economy are forecast to post greater wage growth, with the chemical, oil and gas and manufacturing areas set to implement salary rises of 3 per cent, 3.5 per cent and 3 per cent respectively.

Adam Burden, consultant at Hay Group, commented: “This year’s UK pay forecast suggests optimism is returning to businesses as employers are anticipating salary increases above inflation.

“Now that many employers have reasonable budgets to play with, they need to ensure these are implemented effectively to help make employees feel valued and drive motivation in the workplace. In organisations that give pay rises based on performance, employees finally have a good increase to aim for.”

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Further findings from Hay Group revealed that salaries are set to grow by an average of 5.4 per cent across the world during 2015, up by 0.2 per cent over the previous year. However, emerging nations such as Brazil and Russia are slowing down, having been the “key drivers” in recent times. After inflation is taken into account, countries including Ukraine will actually experience real wage cuts.

Despite struggling in the years after the economic downturn, Greece and Ireland are steadying and are expected to post salary increases of 1.3 per cent and 1.4 per cent (and real wage growth of 2.5 per cent and 1.1 per cent) respectively.

Burden added: “The global pay increase conceals significant variations from region to region and country to country, with the biggest turnarounds experienced in Europe and emerging markets.

“Real pay is now rising in many European markets, but in key emerging economies, which have been through an economic boom in the last ten years, real wages are in fact falling.”

Image: Shutterstock

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