While several organisations provide global salary increase, one has to be careful not to simply use the proposed salary increase. The time taken by many of these surveys to collate and present the resultant data often means that the survey data is outdated by the time it is published. Further, and perhaps most importantly, these surveys may not be comparable with the pay posture of the company or the sector in which it operates.
Our methodology was to collate historic inflation data, historic “real” salary increases and project inflation for each country for the client’s financial year; a proposed salary increase was then formulated.
His exercise presented several problems. Inflation in developed countries reduced significantly as a result of the feed-through of lower oil prices – an analysis was required of the future trajectory of inflation. Several emerging market countries had experienced a rapid and significant depreciation of their currency – one was thus required to analyse the potential impact on inflation and concomitantly, a cogent salary increase.
Several countries, including Argentina, Ghana, Nigeria, Ukraine and Russia experienced unique economic problems which rendered proposing a salary increase challenging. For these countries, unique and novel solutions were proposed such as the introduction of a variable “Inflation Allowance” to ensure that high salary increases did not simply entrench high costs when inflation subsidised to “normal” levels.