How inflation will kill your 2016 salary increase

South African companies expect the average salary to increase by 6.9% in 2016 – but this will largely be undone thanks to an inflation rate hovering near 6%.

This is according to the 2016 ECA International Salary Trends Survey, which reports that the average salary increase in South Africa in 2016 is among the 20 highest in the world.

The survey is based on information collected from 336 multinational companies across 70 countries and regions.

South Africa’s average increase of 6.9% in nominal terms is the 20th highest rate in the world, in nominal terms.

However, once inflation is taken into account salaries will rise by only 1% on average next year.

“This is lower than the 2.2% real wage increases seen in 2015 due to the rising inflation rates forecast next year at 5.9%, up from 4.8% in 2015,” the group said.

Global outlook

Globally, according to company predictions from around the world, wages will rise 5.1% on average in 2016, slightly up on 2015’s 5% average.

Once inflation has been factored in, the global average is forecasted to be 1.7%, which is similar to last year’s average of 1.5%.

Companies in Venezuela are forecasting the survey’s highest nominal pay rises in 2016, ECA said – employers there are predicting 60% pay rises for staff next year on average.

However, this is completely offset once inflation of over 204% has been factored in.

“Employees will actually experience the largest global decrease in spending power in 2016,” the group noted.

The lowest forecasted nominal salary increase is expected in Greece in 2016, where companies anticipate a 1.5% increase compared with Europe’s 2.8% average.

In real terms, South Africa’s nominal increases rank only 55th out the countries surveyed.

Top 20 countries for pay increases in 2016

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