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Buenos Aires (UPI) Dec 10, 2012
A continuing boom in commodity prices and associated economic growth is set to push wages in emerging markets, with some rises likely to be dramatic, in contrast to pay cuts or pay freeze in the industrial world, a study indicated.
Findings by global management consultant Hay Group focused on the high-growth markets worldwide but also revealed that some pay hikes will happen despite slow growth, as in Venezuela.
The oil-rich Latin American country has been in recession for more than two years but has been able to keep most economic activity going with state funding and subsidies.
With pay rates barely outstripping or in some cases falling behind inflation, organizations need to pay more attention to variable pay and non-financial recognition programs and career development opportunities designed to retain key talent, the study said.
Salaries in developed Western economies will experience the smallest increases in 2013, as gross domestic product growth remains broadly flat.
In contrast, Latin America is experiencing an intra-regional brain drain, with skilled labor moving from slow-growth and poorer countries to richer neighbors. Argentina, Brazil and Chile top the list of countries facing migration from neighboring countries, analysts said.
Latin American firms are expected to be the big spenders of 2013, with average pay raises of 9 percent expected across the region, the study said.
Venezuela will enjoy the highest pay increases -- 29 percent -- and Argentine organizations will also implement considerable wage hikes of up to 24.5 percent.
Developed economies can expect more cautious increases -- 3 percent in the United States, said the study.
With annual consumer price index growth factored in -- 2 percent in the United States -- employees are set to see a net gain of 1 percent.
"Ongoing economic uncertainty in North America and Europe has caused organizations in these regions to take a more cautious approach to salary increases than their high-growth-market counterparts," said Jeff Blair, Hay Group's U.S. productized services leader.
"Global organizations trying to attract top talent across both markets will have to pay careful attention to reward program design and focus more than ever on creating positive cultures with strong values to attract, engage and retain high-performing employees in each region," Blair said.
Hay Group based its research on the salary expectations of more than 20,000 reward specialists in 69 countries worldwide, representing 14 million employees.
The data were drawn from Hay Group PayNet, which contains data for more than 14 million job holders in 20,000 organizations across more than 100 countries.
GDP and consumer price index figures were sourced from the Economist Intelligence Unit in November 2012, the company said.
Hay Group, which has headquarters in Philadelphia, has more than 2600 employees working in 85 offices in 49 countries.
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