UK employees will start to see a recovery in real wage growth in 2015 as a result of lower inflation levels, according to research by global management consultancy Hay Group.
Its Global salary forecasts 2015 report found that while salary forecasts of 2.5% remain the same as 2014, lower predicted inflation levels of 1.7% mean UK employees will experience a 0.8% increase in real income.
By sector, the research found subtle variations in pay.
Organisations in engineering-related sectors are forecasting larger increases in pay. Employers in the chemical, oil and gas, and manufacturing sectors predict salary rises above the UK average at 3%, 3.5% and 3% respectively.
Other sectors, such as retail, expect salary increases of 2% while finance, fast-moving consumer goods (FMCG) and utility sector employers all mirror the UK average of 2.5%.
In addition, in Europe, salary increases are driven by previously struggling countries returning to economic growth. Pay is expected to rise by 3.1% in 2015.
Turkey will experience the largest increase in Europe with pay rises up to 9%, but employees will still feel a squeeze on income with inflation predicted to be 8.9%.
Globally, salaries are predicted to increase compared to last year. This year, pay is set to rise by 5.4% on average for 2015, in comparison to 5.2% last year.
Adam Burden, consultant at Hay Group, said: “This year’s UK pay forecast suggests optimism is returning to businesses as employers are anticipating salary increases above inflation.
“Now that many employers have reasonable budgets to play with, they need to ensure these are implemented effectively to help make employees feel valued and drive motivation in the workplace.
“In organisations that give pay rises based on performance, employees finally have a good increase to aim for.
“The global pay increase conceals significant variations from region to region and country to country, with the biggest turnarounds experienced in Europe and the emerging markets.
“Real pay is now rising in many European markets, but in key emerging economies, which have been through an economic boom in the last 10 years, real wages are, in fact, falling.”
