Europe's Salary Surge is to Dip Next Year Despite Confidence Boost

Salary rises in Europe are set to decline in 2014 despite reported confidence in the economic recovery, according to new research.

The latest wage forecast data from consultant Hay Group, which questioned more than 10,000 employers in 31 countries, found workers across the region are expected to see an average pay rise of 3.1% next year - 0.2% down on last year's forecast.

The study found Europe's emerging nations can expect the highest pay rises next year with Ukraine (7.9%), Russia (7.8%) and Turkey (7.7%) experiencing the greatest up-tick in wages in the region, although all are down on last year.

Eastern European nations also continue to experience above average rises in pay. Romania (5%), Bulgaria (5%) and Estonia (3.2%) will all see strong wage increases next year, according to Hay.

"Despite reported confidence in the economic recovery of the Western European markets, this optimistic outlook is not being reflected in wages," said Ben Frost, a consultant at Hay.

Frost added: "Although economic forecasts may be looking more positive, companies remain cautious."

Meanwhile, the study said pay increases for employees in Europe's developed markets such as Germany, France and the UK will remain modest.

UK employees will experience below average pay increases (2.5%) – a drop of 0.5% since 2013.

France too will see pay rise by 2.5% next year – 0.1% less than last year – while salary increases in Germany will remain at 3% for a second year.

At the other end of the spectrum, Europe's Southern-most countries are still feeling the after-effects of the financial crisis.

Employees in Greece will experience no rise in pay next year and Portugal (0.8%) and Spain (1.1%) will see the lowest pay increases in the region, with no year-on-year improvement.

Global Slowdown

Hay said globally pay is set to increase by 5.2% on average, representing a 0.3% decline compared to last year's forecasts.

Venezuelan employees look set to receive the biggest wage increases at 27%.

Yet, with inflation predicted to reach 36.4% in 2014, employees will actually feel a significant cut in real income.

Salaries in Asia are expected to increase by an average 7% – 0.2% less than the rise in 2013, reflecting slowing but still strong economic forecasts.

The highest increases will be seen in Vietnam (11.5%), India (10.9%), Indonesia (10%) and China (8.6%).