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Compensation Budgets
for 2018
Planning Global Compensation Budgets for 2018
As we approach 2018 global compensation and financial planning and budgeting, it is timely to provide
ERI Economic Research Institute readers with insight into the world economy and its effect on 2018
salary increase budgeting. The International Monetary Fund (IMF) in their April 2017 World Economic
Outlook (WEO) identifies important economic and labor trends that affect multi-national organizations:
With buoyant financial markets and a long-awaited cyclical recovery in manufacturing and trade under
way, world growth is projected to rise from 3.1 percent in 2016 to 3.5 percent in 2017 and 3.6 percent
in 2018 . . . Binding structural impediments continue to hold back a stronger recovery and the balance
of risks remains tilted to the downside, especially over the medium term. With persistent structural
problemssuch as low productivity growth and high income inequalitypressures for inward-looking
policies are increasing in advanced economies. These threaten global economic integration and the
cooperative global economic order that has served the world economy, especially emerging market and
developing economies, well.1
The WEOs findings indicate wages have not kept up with productivity in many countries over the
last 30 years leading to a reduction in labors share of the national income. The findings suggest that
the increase in technology has been the primary driver of the decline in the labor share in advanced
economies, and trade integration has been the primary driver of the decline in emerging markets. The
WEO highlights the need to make growth more inclusive.
1,2
International Monetary Fund. 2017. World Economic Outlook: Gaining Momentum? (pp. xv-xvii) Washington, April.
2 | ERI Economic Research Institute | Planning Global Compensation Budgets for 2018 | May 2017
Projected 2018 Salary Increases by Country and Historical Trends
An analysis of early projections of 2018 salary increases across 72 countries is provided in Table
1 to support businesses in next years salary increase budgeting. This table also includes the
International Monetary Funds updated research on 2016, 2017, and 2018 actuals/projections
for unemployment, growth in gross domestic product (GDP) and change in the consumer price
index (CPI). This advanced look at 2018 salary increase projections is based on ERI Economic
Research Institutes extensive database, plus global historical trends and projections. Data from
governmental resources, publications, and over 20,000 companies were assessed in this review.
Table 1 2016-2018 Global Salary Increase Trends with Key Economic Indicators
Unemployment Rate2 Gross Domestic Product2 Consumer Price Indices2 Salary Increase1
% Labor Force % Change from Prior Year % Change from Prior Year % Annual Change
2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018
Argentina 8.5 7.4 7.3 -2.3 2.2 2.3 - 25.6 18.7 30.0 28.0 26.0
Brazil 11.3 12.1 11.6 -3.6 0.2 1.7 8.7 4.4 4.3 7.9 8.0 8.0
Canada 7.0 6.9 6.8 1.4 1.9 2.0 1.4 2.0 2.1 3.0 3.0 3.0
Chile 6.5 7.0 6.8 1.6 1.7 2.3 3.8 2.8 3.0 5.0 5.0 5.0
Americas
Colombia 9.2 9.5 9.3 2.0 2.3 3.0 7.5 4.5 3.2 4.6 6.5 6.5
Mexico 4.3 4.4 4.4 2.3 1.7 2.0 2.8 4.8 3.2 4.7 4.5 5.0
Panama 4.8 3
5.0 3
5.3 3
5.0 5.8 6.1 0.7 2.0 2.3 5.0 4.5 4.5
Peru 6.7 6.7 6.7 3.9 3.5 3.7 3.6 3.1 2.6 5.0 5.0 5.0
United States 4.9 4.7 4.6 1.6 2.3 2.5 1.3 2.7 2.4 3.0 3.1 3.2
Venezuela 21.2 25.3 28.2 -18.0 -7.4 -4.1 254.9 720.5 2068.5 65.0 238.0 683- 1241*
Australia 5.7 5.2 5.1 2.5 3.1 3.0 1.3 2.0 2.4 3.5 3.0 3.0
China 4.0 4.0 4.0 6.7 6.6 6.2 2.0 2.4 2.3 8.0 7.5 7.0
Hong Kong 3.3 3.2 3.2 1.9 2.4 2.5 2.6 2.6 2.7 4.5 4.2 4.2
India 3.5 4 3.4 4 3.4 4 6.8 7.2 7.7 4.9 4.8 5.1 10.9 10.3 10.5
Indonesia 5.6 5.4 5.2 5.0 5.1 5.3 3.5 4.5 4.5 9.2 9.0 9.0
Japan 3.1 3.1 3.1 1.0 1.2 0.6 -0.1 1.0 0.6 2.5 2.4 2.3
Malaysia 3.5 3.4 3.2 4.2 4.5 4.7 2.1 2.7 2.9 5.7 5.5 5.5
Asia Pacific
New 5.1 5.0 4.8 4.0 3.1 2.9 0.6 1.5 2.0 3.2 3.1 3.0
Zealand
Pakistan 6.0 6.0 6.1 4.7 5.0 5.2 2.9 4.3 5.0 11.2 10.7 10.5
Philippines 5.5 6.0 5.5 6.8 6.8 6.9 1.8 3.6 3.3 6.7 6.8 6.9
Singapore 2.1 2.1 2.1 2.0 2.2 2.6 -0.5 1.1 1.8 4.3 4.3 4.2
South 3.7 3.8 3.6 2.8 2.7 2.8 1.0 1.8 1.9 5.0 4.8 4.8
Korea
Taiwan 3.9 4.0 4.0 1.4 1.7 1.9 1.4 1.4 1.3 4.0 4.0 4.0
Thailand 0.8 0.7 0.7 3.2 3.0 3.3 0.2 1.4 1.5 5.9 5.7 5.5
Vietnam 2.4 2.4 2.4 6.2 6.5 6.3 2.7 4.9 5.0 10.4 10.0 9.7
Sources:
1. Economic Research Institute
2. International Monetary Fund. 2017. World Economic Outlook: Gaining Momentum? Washington, April.
3. World employment and social outlook: Trends 2015 / International Labour Office. Geneva: ILO, 2015;
4. World employment and social outlook: Trends 2017 / International Labour Office. Geneva: ILO, 2017
3 | ERI Economic Research Institute | Planning Global Compensation Budgets for 2018 | May 2017
Unemployment Rate2 Gross Domestic Product2 Consumer Price Indices2 Salary Increase1
% Labor Force % Change from Prior Year % Change from Prior Year % Annual Change
2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018
Algeria 10.5 11.7 13.2 4.2 1.4 0.6 6.4 4.8 4.3 6.5 6.3 6.0
Austria 6.1 5.9 5.9 1.5 1.4 1.3 1.0 2.1 1.8 2.9 2.9 2.7
Belgium 8.0 7.8 7.6 1.2 1.6 1.5 1.8 2.0 1.7 2.5 2.5 2.3
Bulgaria 7.7 7.1 6.9 3.4 2.9 2.7 -1.3 1.0 1.8 4.0 4.0 4.0
Cyprus 12.9 11.3 10.2 2.8 2.5 2.3 -1.2 1.5 1.4 1.7 1.8 2.0
Czech 4.0 3.8 4.2 2.4 2.8 2.2 0.7 2.3 1.8 2.5 2.6 2.7
Republic
Denmark 6.2 5.8 5.8 1.1 1.5 1.7 0.3 0.6 1.1 2.6 2.8 2.6
Egypt 12.7 12.6 11.8 4.3 3.5 4.5 10.2 22.0 16.9 10.0 11.0 11.0
Estonia 6.9 8.3 8.9 1.6 2.5 2.8 0.8 3.2 2.5 3.0 2.5 3.2
Finland 8.8 8.5 8.3 1.4 1.3 1.4 0.4 1.4 1.6 2.3 2.2 2.2
France 10.0 9.6 9.3 1.2 1.4 1.6 0.3 1.4 1.2 2.7 2.6 2.5
Germany 4.2 4.2 4.2 1.8 1.6 1.5 0.4 2.0 1.7 3.0 3.0 3.0
Greece 23.8 21.9 21.0 0.0 2.2 2.7 0.0 1.3 1.4 1.8 2.1 2.1
Hungary 4.9 4.4 4.3 2.0 2.9 3.0 0.4 2.5 3.3 3.5 3.2 3.4
Ireland 7.9 6.5 6.3 5.2 3.5 3.2 -0.2 0.9 1.5 2.1 2.4 2.5
EMEA (Europe, Middle East, and Africa)
Israel 4.8 4.8 4.8 4.0 2.9 3.0 -0.5 0.7 1.4 3.0 3.0 3.0
Italy 11.7 11.4 11.0 0.9 0.8 0.8 -0.1 1.3 1.3 2.6 2.7 2.7
Jordan 11.1 3
11.0 3
11.0 3
2.1 2.3 2.5 -0.8 2.3 2.5 5.7 5.7 5.6
Kazakhstan 5.0 5.0 5.0 1.1 2.5 3.4 14.6 8.0 7.2 8.5 8.1 8.4
Kenya 9.1 3
9.1 3
9.1 3
6.0 5.3 5.8 6.3 6.5 5.2 7.9 7.5 7.5
Kuwait 2.1 2.1 2.1 2.5 -0.2 3.5 3.2 4.2 3.6 4.4 4.8 5.0
Latvia 9.6 9.4 9.2 2.0 3.0 3.3 0.1 2.8 2.5 3.3 3.3 3.5
Lebanon 6.8 3 6.9 3 6.9 3 1.0 2.0 2.5 -0.8 2.6 2.0 - 5.5 5.5
Lithuania 7.9 7.4 7.2 2.3 2.8 3.1 0.7 2.8 2.0 3.5 3.6 3.6
Luxembourg 6.4 5.9 5.7 4.0 3.7 3.5 0.1 1.4 1.3 2.9 3.0 2.8
Morocco 9.4 9.3 9.5 1.5 4.4 3.9 1.6 1.2 1.5 4.5 4.1 4.1
Netherlands 5.9 5.4 5.3 2.1 2.1 1.8 0.1 0.9 1.4 2.8 2.9 2.8
Norway 4.8 4.5 4.2 1.0 1.2 1.9 3.6 2.6 2.5 3.0 3.0 3.0
Poland 6.1 5.5 5.3 2.8 3.4 3.2 -0.6 2.3 2.3 3.0 2.7 3.0
Portugal 11.1 10.6 10.1 1.4 1.7 1.5 0.6 1.2 1.4 2.0 2.2 2.2
Qatar 0.4 3
0.4 3
0.4 3
2.7 3.4 2.8 2.7 2.6 5.7 4.4 4.8 5.0
Romania 6.0 5.4 5.2 4.8 4.2 3.4 -1.6 1.3 3.1 4.5 4.7 4.6
Russia 5.5 5.5 5.5 -0.2 1.4 1.4 7.0 4.5 4.2 8.0 8.0 8.0
Saudi Arabia 5.7 5.3 4 5.3 4 1.4 0.4 1.3 3.5 3.8 5.1 4.7 4.9 5.0
Slovakia 9.7 7.9 7.4 3.3 3.3 3.7 -0.5 1.2 1.5 2.7 2.8 2.8
South Africa 26.7 27.4 27.7 0.3 0.8 1.6 6.3 6.2 5.5 6.8 6.7 6.8
Spain 19.6 17.7 16.6 3.2 2.6 2.1 -0.2 2.4 1.4 2.3 2.4 2.5
Sweden 7.0 6.7 6.7 3.3 2.7 2.4 1.1 1.4 1.6 2.8 2.9 2.9
Switzerland 3.3 3.0 2.9 1.3 1.4 1.6 -0.4 0.4 0.7 2.0 2.2 2.2
Tanzania 3.2 3 3.2 3 3.3 3 6.6 6.8 6.9 5.2 5.1 5.0 7.0 7.0 7.0
Tunisia 14.0 13.0 12.0 1.0 2.5 3.1 3.7 3.9 3.8 6.5 6.5 6.5
Turkey 10.8 11.5 11.0 2.9 2.5 3.3 7.8 10.1 9.1 8.0 8.0 9.2
Uganda 3.5 3
3.4 3
3.3 3
4.7 5.0 5.8 5.5 6.3 6.0 6.8 6.5 7.1
Ukraine 8.8 9.0 8.7 2.3 2.0 3.2 13.9 11.5 9.5 11.7 12.3 11.6
United Arab 3.4 3 3.3 3 3.3 3 2.7 1.5 4.4 1.8 2.8 3.7 4.5 4.8 4.8
Emirates
United 4.9 4.9 5.1 1.8 2.0 1.5 0.6 2.5 2.6 2.8 3.0 3.0
Kingdom
4 | ERI Economic Research Institute | Planning Global Compensation Budgets for 2018 | May 2017
Key Observations
Americas
Salary increases for 2018 in the United States are projected at 3.2, while salary increases in
Canada will remain stable at 3.0%. Minimal change is also expected in unemployment over the
same time period, with the United States decreasing from 4.7% to 4.6% and Canada decreasing
from 6.9% to 6.8%.
The recession in Brazil is expected to ease in 2018 according to the IMF. Unemployment is
projected to decrease from 12.1% to 11.6%. The change in the CPI has decreased over the
last two years by over 4 percentage points, with 2018 projected at 4.3%. Salary increases are
expected to be maintained at 8.0% in 2017 and 2018.
Venezuelas catastrophic economy, civil unrest, and hyperinflation require close observation
and regular action. Unemployment is forecasted to increase from 25.3% to 28.2% from 2017
to 2018. Also, inflation is expected to almost triple from 720.5% in 2017 to 2068.5% in 2018.
Salary increases are projected to end the year in 2017 at 238% and escalate to 683-1241% in
2018. A hyperinflationary environment such as this requires regular action (e.g., monthly) and
adjustments throughout the year.
Argentina will also continue with double-digit inflation. The change in CPI is expected to reach
25.6% in 2017 but projected to decline to 18.7% in 2018. The 2018 salary increase is forecasted
at 26%. Unemployment is expected to slightly decrease from 7.4% in 2017 to 7.3% in 2018.
Western Europe is projected to implement 2.6% average salary increases (2.6% median) in 2018.
Greece is low at 2.1%, while Austria, Germany, Norway, and United Kingdom are high at 3.0%.
Russias 2018 salary increases are projected at 8.0% and the Ukraine will continue with double-
digit increases at 11.6%.
Asia Pacific
The IMF states that growth in China is forecasted at 6.6% in 2017, slowing to 6.2% in 2018.
Elsewhere in emerging and developing Asia, growth is expected to remain robust. The 14 APAC
reported countries are projected to have average salary increases in 2018 at 6.0% (median at
5.5%). Japan is low at 2.3% and India and Pakistan are high at 10.5%.
5 | ERI Economic Research Institute | Planning Global Compensation Budgets for 2018 | May 2017
Summary
The 2018 projections indicate salary increase budgets throughout the majority of the world between
2% and 5%. High inflationary countries, such as Venezuela and Argentina require close observation
and action, as needed, to ensure up-to-date compensation programs. The loss of real income for
Venezuela employees is a catastrophic issue for businesses and their national economy alike.
The WEO states, The global economy seems to be gaining momentumwe could be at
a turning point. But even as things look up, the post-World War II system of international
economic relations is under severe strain despite the aggregate benefits it has deliveredand
precisely because growth and the resulting economic adjustments have too often entailed
unequal rewards and costs within countries.3
The guidance of the IMF in Chapter 3 of the WEO Understanding the Downward Trend in Labor
Income Shares provides us with an opportunity to look at our Total Rewards strategies and
practices to ensure fair and equitable distribution of rewards between all levels of employees.
Are we appropriately distributing income based on performance for all employee groups
throughout our businesses at base pay, total cash compensation, total direct compensation,
and even taxable income? Are we adequately preparing our workforce for reeducation and
relocation as globalization, technological advances, and artificial intelligence displace jobs? A
break though in technology fundamentally changing the way people work also requires an
investment in Human Capital to prepare employees for the future. Whose responsibility is this:
the employee, the government, or the business? Perhaps we can all take responsibility.
In this important, transitional environment, Human Capital and Total Rewards management in
the United States and globally have an opportunity to influence and guide our organizations
today to ensure a better workplace for tomorrow.
Learn More
3
International Monetary Fund. 2017. World Economic Outlook: Gaining Momentum? (pp. xv-xvii) Washington, April.
This report was prepared by Linda L. Cox, CCP, with research assistance from Katie Sebastian.
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6 | ERI Economic Research Institute | Planning Global Compensation Budgets for 2018 | May 2017