Irish salaries are forecast to increase by 3.9 per cent next year, while inflation is likely to rise by 2.3 per cent, a leading consultancy firm claimed today.
In its worldwide pay survey published today, Mercer Human Resource Consulting said it expects pay in the EU to rise by 2.1 percentage points above inflation, on average
The survey highlights notable difference in pay between the "old" and "new" economies suggesting pay rates are converging.
While the average pay in the better performing economies such as Ireland, Britain and the US are forecast to rise by between 1 and 3 percentage points above inflation.
Wage inflation in some of emerging economies is expected to rise at an even faster rate. In Lithuania, India and Bulgaria, for example, salaries are expected to outpace inflation by 7.7 per cent, 7.2 per cent and 5.6 per cent respectively.
Mr Brian Duncan of Mercer said "Wage inflation appears to be levelling off, despite the strengthening economies around the world and the increase in employment rates. The global uncertainty arising from Middle Eastern conflicts is obviously having a detrimental effect on consumer confidence and consequently investment"
Pay levels in many Eastern European countries are likely to rise sharply next year according to Mercer. In Lithuania and Latvia, salaries are forecast to rise by 9.9 per cent and 9.1 per cent respectively. These countries will also experience comparatively low inflation, at 2.2 per cent and 3.5 per cent.
While salary increases in the US and Canada are likely to remain in line with recent years, at 3.5 per cent and 3.3 per cent respectively, inflation is likely to rise to 3.1 per cent in both countries.
Mr Duncan commented; "Despite the historically low interest rates and euro/dollar exchange rate, annual wage increases in real terms in North America are actually declining. Again, this can largely be attributed to the lack of consumer confidence in the country, resulting in lower levels of investment."
Predicted pay increases in some Central and South American countries are amongst the highest in the world. However, these rises are likely to be offset by high inflation rates. In the Dominican Republic employees are forecast to receive pay rises of 22.5 per cent , while inflation is likely to be 35 per cent.
Salary increases in many Asian/Pacific countries are expected to be high next year, outpacing inflation rates. Employees in India and Indonesia are likely to receive pay increases of 11.4 per cent and 11.3 per cent respectively, against inflation of 4.2 per cent and 7 per cent .
Mr Duncan added: "Pressure on pay is likely to be high in Asia in 2005 due to improved business sentiment following the recovery from the SARS epidemic and political and economic stability. The emergence of China as a global superpower and the I.T. industry in India means that companies will have to pay premiums to attract and retain experienced, qualified staff in these employment hot spots"