Will India see biggest real-terms salary increase in 2023?

ECA reports that India will witness 4.6% salary increase next year, followed by Vietnam at 4%

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India will see the biggest real-terms salary increase of 4.6 per cent, says a report by ECA, the global mobility solutions company. A Salary Trends Survey 2022/2023 by ECA reveals that India will be amongst the top five countries predicted to witness real-terms salary increases in 2023.

Next to India would be Vietnam with 4.0 per cent increase and China with 3.8 per cent increase.

The predicted average real salary increase in any country is calculated by studying the predicted average nominal salary percentage increase, that is, the salary increment given to employees by their organisations and subtracting the forecast inflation. Therefore, if the average nominal salary hike in a country is four per cent and inflation is at 2.1 per cent, the resultant average real salary increase will be 1.9 per cent.

The top five countries (among the 68 countries and cities studied) with forecasted real-salary increases globally in 2023 are India, Vietnam, China, Brazil and Saudi Arabia.

The bottom five forecasted real-salary decreases globally in 2023 will be seen in Pakistan, Ghana, Turkey, Sri Lanka and Argentina.

As per the most recent Salary Trends Report by ECA International, the real wage of workers in Singapore (equal to nominal wage growth minus the rate of inflation) dipped by 1.7 per cent in 2022. However, it is expected to grow by one per cent in 2023.

In the US, employees witnessed a real-terms salary decrease of -4.5 per cent in 2022, with inflation at 8.1 per cent. Next year, inflation is expected to fall to 3.5 per cent. The average nominal salary is expected to increase by 4.5 per cent and real-terms increase is expected to be one per cent.

In Asia, on average, salaries went up by 0.3 per cent in real terms across the region. Employees in China saw real-terms salaries increase 3.7 per cent.

However, purchasing power reduced in many countries, with Sri Lanka being impacted the most because of very high inflation.

In spite of a 3.5 per cent nominal pay hike this year, real-terms salaries in Britain fell by -5.6 per cent, due to 9.1 per cent average inflation.

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