At first glance, Korn Ferry’s 2020 global salary forecast tells a familiar story, but there’s a twist in the tale. While 2020 salary increases across the globe are expected to grow at 4.9% – about the same rate as 2019 – slowing inflation means employees will see an increase in the real-wage salary they take home at the end of the day.
While the story in the Pacific follows the same general trend with real-wage increases up on 2019, the magnitude of those increases in Australia and New Zealand is below the global average and well below the increases expected by our nearest Asian neighbours.
Australia will see 2.5% topline growth, in line with last year. And with a 1.5% inflation rate, Australian workers are looking at a predicted 1.0% real-wage increase, up from 0.2% in 2019. New Zealand is also predicted to see a 2.5% salary increase, but their slightly higher inflation rate (1.9%) drops their predicted real-salary increase to 0.6%, up slightly from last year’s 0.3% increase.
The global picture
Around the globe, salaries are predicted to grow at a rate of 4.9% in 2020. With a predicted global inflation rate of approximately 2.8%, the real-wage salary increase is expected to be 2.1%. So while the 2019 salary growth rate was a touch higher at 5.1%, a higher global inflation figure of 4.1% meant 2019 real-wage salary increases across the globe were only 1.0 percent
This feels like good news for employees. And of course, in many ways it is. But it also may reflect a shifting economic outlook that may mean slower growth in several key countries and an increased risk of higher unemployment.
Highest real-wage growth in Asia
Asian economies can again expect to see the highest salary increases globally. The topline 2020 forecast is for a 5.3% increase, with real-wage salaries expected to increase 3.1% (up from 2.6% last year) as inflation drops to 2.2%.
While the headline figures tell a good story, a patchwork of regional economies sits behind them. China’s real-wage growth for 2020 is expected to weaken to 2.9%, continuing the downward trend from 3.2% last year and 4.2% the year before. Other mature economies are predicted to see increases, with Japan looking at a real-wage increase of 0.6%, up from 2019’s prediction of 0.1% and Singapore predicting a boost of 3.6% to real-wage salaries, up from 3.0% last year. In Hong Kong, political uncertainty and a relatively high inflation rate of 2.6 percent has translated to a more modest real-wage growth forecast of 1.4%.
For Australia, it’s all in the (job) family
While average salary increases in both Australia and New Zealand are again expected to be modest in 2020, this doesn’t tell the full story. Particular job families continue to see stronger than average wage growth and Australian organisations will need to think strategically about how they target their budgeted salary increases to ensure they have the right people and the right pipeline in place to ensure success.
Tech-based roles, unsurprisingly, are at the top of the list when it comes to well-paid roles, particularly in data analytics, AI, robotics and cyber security. Jonathan Morse, Senior Client Partner at Korn Ferry, certainly sees candidates in these areas as holding the power in remuneration negotiations: “what you are seeing in some of those areas, is the candidates being able to demand the salary compared to being offered the salary,” explains Morse. “There’s such a small talent pool and you have every company in the country wanting to grab a hold of them. The basic rules of supply and demand mean that it’s certainly a talent pool where the candidate has significantly more leverage.”
Because of this, Morse is seeing an increased focus on short- and long-term incentives, particularly where organisations are looking to align their reward budget to performance. “This shift really helps candidates buy into the vision, culture and outcome for an organisation. So, although you may not be paying them much more from a fixed perspective, if they and the firm are successful, then they can really generate some wealth.”
Other specific roles that are seeing higher than average increases include:
- Risk management: The focus on risk, governance and compliance across the Australian business landscape has led to above-market increases for both junior and senior roles. We see high demand and consequently higher salaries for roles such as Junior Anti-Money Laundering Officer, Risk Management Director, Credit Risk Analyst and Credit Risk Manager
- Construction: Australia’s infrastructure boom, including the Melbourne Airport rail link and Sydney's WestConnex tunnel, mean large contractors are competing not only to bring on more people, but also to keep their best people from walking. As such, we’re seeing increased wage pressure, particularly for Construction and Project Management talent.
- Oil and gas: We continue to see salaries picking up in this sector as competition for and retention of technical and non-technical roles remains strong. Increases in 2019 were at 3.0% for operational roles, 3.8% for supervisory roles, 4.3% for middle management at 2.5% for executives and we expect this trend will continue.
About the study
The data was drawn from Korn Ferry’s pay database which contains data for 500 organisations in the ANZ region and more than 25,000 from 110 countries worldwide, covering some 20 million job holders.
It shows predicted salary increases, as forecasted by global HR leaders, for 2019 and compares them to predictions made at this time last year regarding 2018. It also compares them to 2019 inflation forecasts from the Economist Intelligence Unit.
Our interactive site with more detailed figures, and a downloadable infographic with headline figures for each country is here.