AonHewittIndustry Insight

Aon Hewitt Survey Shows Positive Salary Increases Across Multiple Regions in 2013

A new survey from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), finds that for the first time in several years, employees in multiple regions saw salary increases in the positive range for 2013, mainly due to lower inflation rates.

However, projected salary spending for 2014 is expected to vary amidst continued global economic and political uncertainty.

Aon Hewitt’s Global Salary Increase Survey of more than 12,890 employers in 120 countries shows that when adjusted for inflation, average salary increases rose in all regions except for Africa (see chart below). Next year, however, Aon Hewitt’s survey shows salary increases will vary by region. In 2014, workers in Europe and North America are projected to see salary increases at 2.1 percent and 1.7 percent respectively after factoring in inflation, up from 1.0 percent and 1.1 percent in 2013. Salary increases for workers in Asia Pacific and Latin America are projected to be flat year on year, while workers in Africa and the Middle East will see decreases.

“Due to ongoing economic challenges in many regions around the world, companies are remaining conservative with their compensation budgets, “said Yanina Koliren, global compensation surveys and solutions leader at Aon Hewitt. “Salaries are increasing, but inflation plays a key factor in whether employees see an impact on their paychecks. This year, improved interest rates in multiple regions mean good news for many employees around the world.”

Global Average Salary Increases vs. Inflation Adjusted Increases 2012-2014

2012 Average Increases 2012 Average Increases (Factoring in Inflation) 2013 Average Increases 2013 Average Increases (Factoring in Inflation) 2014 Average Increases* 2014 Average Increases* (Factoring in Inflation)
Africa 7.6% -0.4% 7.2% -0.5% 5.8% -1.0%
Asia 5.5% 1.6% 5.8% 2.2% 5.9% 2.1%
Europe 3.8% -0.1% 3.7% 1.0% 3.7% 1.6%
Latin America 6.2% -0.2% 5.9% 0.0% 5.4% 0.0%
Middle East 6.0% 0.5% 5.8% 2.1% 6.0% 1.8%
North America 2.9% 0.1% 2.9% 1.1% 3.0% 1.7%

*projected

Key Highlights by Region

  • Africa – Average salary increases in Africa remain the highest in the world, but the rate of increase is expected to continue to decline amidst continued political and economic turmoil in the region.
  • Asia Pacific  Due to relatively stable macroeconomic indicators, salaries for workers in Asia rose 5.8 percent in 2013, up from 5.5 percent in 2012. Increases are expected to remain strong in 2014. After adjusting for inflation, salary increases are higher in Asia Pacific than anywhere else in the world.
  • Europe – Despite weak macroeconomic indicators in Europe, salaries are improving in the region. Workers in Europe saw pay increases of 3.7 percent in 2013, down slightly from 3.8 percent, and are expected to remain flat in 2014. When accounting for inflation, increases rose sharply.
  • Latin America – Workers in Latin America saw an increase of 5.9 percent in 2013, down slightly from 6.2 percent in 2012. Salary increases are expected to decline again in 2014. When adjusting for inflation, salaries were flat.
  • Middle East – In 2013, the Middle East shows a slight decline in the rate at which salaries increased (up by only 5.8 percent) from 2012, but they are expected to jump to 6 percent in 2014. Improvements in inflation have resulted in a rebound in net salary increases for employees in that region.
  • North America – Salary increases remained flat for workers in the U.S. and Canada at 2.9 percent in 2013. A modest increase of 3.0 percent is projected for 2014, which will be the highest level since 2008 when salary increases were 3.7 percent. When accounting for inflation, salary budgets are projected to increase from 1.1 percent in 2013, to 1.7 percent in 2014.

Increased Focus on Variable Pay Programs
As companies continue to be conservative with their compensation budgets, Aon Hewitt’s survey shows a growing number of organizations continue to use variable pay programs—or performance-based awards that must be re-earned each year—to attract, engage and reward high performing employees. According to Aon Hewitt, 81 percent of companies around the world offered some form of variable pay program in 2013.

For more information about Aon Hewitt’s 2013 Salary Increase Survey, please visit http://www.globalcompensation.net.

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