In the World Economic Outlook produced in October 2017 by the International Monetary Fund, economic activity is strengthening globally and projected to rise to 3.7% in 2018.
Salaries are Rising.
Salaries are also on the rise globally in 2018, according to a report by the Economic Research Institute. The report was compiled using data from governmental resources, publications, and information from over 20,000 companies, and includes a county-by-country breakdown of growth, unemployment, inflation, and salary increases over the past 3 years.
Human Resource teams in Global Organisations must be nimble enough to respond to the needs of their employees in the most turbulent economies, especially Venezuela, Argentina and Egypt.
In the Americas, all eyes are on Venezuela, as its economy continues to suffer, with hyperinflation of 2,349.3% in 2018, requiring monthly pay reviews and salary increases of up to 60%. Although the situation in Venezuela is extraordinary, Argentina is also battling hyperinflation, projected at over 17% in 2018. Stability is also still sorely needed in Egypt, which ended 2017 with an inflation rate of 21.9%. Brazil is sustaining salary increases of 8% again in 2018, just as in 2017. Russia and the Ukraine will see pay increases of 8% and 11% respectively.
Elsewhere the situation is more stable. 2018 should see pay increases of 2.6% in Europe, 3.1% in America and Canada. Meanwhile, in Africa and Asia, the reasons for salary rises are positive; economic growth continues at apace.
Other reasons for Salary Growth
Inflation and a growing economy are not the only reasons for 2018’s global salary rises. Real salary increases are driven by a scarcity of people with the right combination of professional skills and local language fluency.
Economic optimism is on the rise and talented employees are in demand, especially in the technology sector. Although artificial intelligence is wiping out the need for some jobs, it’s creating many more. A skills gap is growing more quickly than it can be filled.
According to ManpowerGroup’s eleventh annual global talent survey, 40% of employers globally are having trouble filling roles – the highest proportion since 2007.
Offering a more competitive salary for hard-to-fill vacancies can only be part of the solution. Demand simply outstrips supply in many areas, so certain talent has simply become a precious human resource. What can be done when the talent you seek is like gold-dust?
The problem cannot be overstated – there is a global war for talent. The technological elite – the ‘digerati’ are wanted everywhere. What is the solution?
Grow your in-house talent
It’s now more important than ever before to nurture skills, as the shelf life of those skills is becoming shorter than ever. If you don’t invest in time and training to grow your people, their skills become redundant. Coding languages, algorithms, available hardware is ever-changing and your employees need to be allowed the time and the resources to stay abreast of it all. Professional development has always been essential to effective staff engagement and retention, but now more than ever, it’s an operational necessity.
Businesses who ignore this will find themselves in a perilous situation. Meanwhile, those who redouble their efforts in staff development will not only reduce their recruitment costs – they will gain an enormous competitive advantage. Nurturing and keeping talent in this demanding market is far easier than attracting new recruits.
Retention Plans to Prioritise Salary Increases
As companies grow in-house talent, which is now a necessity, salaries must become a key strand of retention strategies. Today, more than ever, ‘talent has choice’ and turnover rates in high tech and life science industries stand at 10% globally.
Although higher salaries are a cost pressure to many organisations, the cost of filling vacancies is far greater. Businesses that lack the talent required to reach their business goals will stagnate quickly in this market. Lacklustre business performance will not only impact on profits, it will have a knock-on effect on other employees, putting additional pressure on peers to make up for gaps in skills and capacity. De-motivation and disengagement then sets in to the team, which is difficult and expensive to reverse.
The business case for salary increases and worthwhile employee benefits, especially in highly skilled roles, is a sound one.
HR Leaders seeking assistance with their HR strategies can rely on Alliance Group’s Atrium HR Consulting for support. Although launched in the first quarter of 2017, Atrium is already trusted by some of the biggest players of the Global Fortune 500, due to the team’s industry expertise and innovative HR approach.