Employees in the UK set to receive ‘one of lowest salary increases in Europe’

Employees in UK predicted to earn a monthly salary increase equivalent to the price of a couple of coffees.

Salaries in the private sector are expected to rise by just 0.2 per cent next year – that’s up to fifteen times less than our European peers.

According to the latest Salary Trends report, in 2018 the average worker in the UK will earn approximately £4.41 more a month (£53 pa) before tax.

The research by ECA International says this will keep the UK at the bottom of the salary increase table in Europe, ranking 23rd out of 26 countries surveyed in the region. Only employees in Hungary, Poland and Ukraine are anticipated to have lower real salary increases than those in the UK.

It has made the calculation based on the difference between the forecast nominal salary increase (2.8 percent in the UK) and inflation (2.6 percent). The latest survey also reveals that employees in the UK received a 0.1 percent real salary increase this year, lower than forecast in 2016 (0.3 percent), which the report says is due to a jump in inflation caused by sterling’s fall in value.

Steven Kilfedder, Production Manager at ECA International said: “Productivity growth in the UK has remained low in recent years so employers have not been able to offer the level of salary increases that they have been able to in the past. This, combined with higher inflation, which is expected to be 2.6 percent next year, has caused something of a pay crunch for UK workers.”

Europe sees steady inflation 

Although there are early signs of growth in some major European economies, according to the report, wage growth in Germany and France is expected to be less than half the rate of 2015 at 1.2 percent and 0.9 percent respectively. However, as its economy stabilises and inflation falls, employees in Russia are set to receive a 3.1 percent real salary increase next year, taking it to the top of the European rankings in 2018.

The average rise across the continent is expected to be one percent, and for the first time in five years no European nation is expected to experience a salary decrease.

How that compares globally

Elsewhere, the Asia-Pacific countries occupy eight of the top ten spots in the global rankings with above-inflation salary increases across the board. Despite slower economic growth, China is forecast to rank seventh in the world next year, according to the report and the top spot in the region is taken by India, with a 4.9 percent real salary increase predicted. India is only beaten to the global top spot by Argentina, which is forecast to receive an impressive 7.2 percent real salary increase in 2018.

In the Americas, average real salary increases are predicted to be 1.6 percent, slightly higher than in 2017 (1.4 percent). Employees in Mexico are expected by the report to record a real-terms increase of 0.8 percent and pay rises in the US and Canada are set to remain steady, at 0.9 and 1.1 percent respectively.

Meanwhile, Egypt and Nigeria find themselves at the bottom of the global rankings due to high inflation, which will likely far outweigh pay rises and cause real decreases of 11.2 and 4.8 percent respectively, says the report. But lower inflation in Ghana will help the country to leap 51 places globally and top the regional rankings for Africa and Middle East, with employees predicted to enjoy a 4.7 percent real pay hike.

On the other hand, Saudi Arabia and Qatar are both anticipated to experience real salary decreases, says the research, dropping from among the highest ranked nations in the region in 2017 to the lowest in 2018.

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