Quarter of companies globally set to freeze pay: survey

HONG KONG Tue Apr 7, 2009 8:54am BST

HONG KONG (Reuters) - A quarter of the world's companies, and 40 percent in the United States, plan to freeze salaries this year, but employees in South America and India can look forward to robust rises, a global survey shows on Tuesday.

Employees in Japan, Lithuania and Ireland will see the lowest pay rises, according to the survey of 53 countries by London-based research company ECA International. In recession-hit Japan, half of companies plan to freeze salaries.

Globally, average salaries should increase 4.7 percent this year, down from a 6.2 percent rise in 2008, the survey shows.

"The economic upheaval since last September has prompted many firms to revise salary increases significantly from previous predictions," said Lee Quane, ECA's Asia director. "Our results show that, globally, companies have revised their forecasts down, on average, by more than a third."

Companies in Venezuela, in contrast, are set to hand out the biggest pay rises this year, averaging 24 percent and up from 22 percent last year, followed by Argentina where pay is set to increase by 12 percent. Pay hikes in Brazil and Chile meanwhile will be higher than last year.

While pay in India is rising because of a talent shortage, by an expected 10.8 percent this year, pay rises in Latin America, Vietnam and Indonesia are being spurred partly by rising inflation.

Salaries in Vietnam and Indonesia are set to rise by 10.6 percent and 9 percent respectively.

In the United States, pay is expected to rise by just 2.8 percent, down from forecasts for a 4 percent rise in a similar survey taken by ECA in September, and 40 percent of firms will freeze pay.

Salaries across the Asia-Pacific are likely to rise 4.8 percent, compared with a 6.9 percent rise last year, but a third of companies in the region will freeze salaries, the survey shows.

Salaries in mainland China will hold up because of a talent shortage whereas pay in Japan, Singapore, Taiwan and China's special autonomous region of Hong Kong, which are all in recession, will be marginal if at all, although the slowdown will be partly offset by receding inflation in Asia.

Salaries in Singapore and Hong Kong will increase by 2 percent, the same as in Western Europe, while in Eastern Europe they will increase by just under 5 percent. However, 29 percent of European companies plan to freeze salaries this year.

Salary rise rankings for 2009 for 53 countries:

Top 10 Bottom 10

1. Venezuela 43. Hong Kong

2. Argentina 43. Singapore

3. India 43. France

4. Vietnam 47. Taiwan

5. Egypt 47. Sweden

6. Indonesia 49. Switzerland

7. Russia 50. Canada

8. Romania 51. Irish Republic

9. South Africa 52. Lithuania

10. Latvia 53. Japan

(Reporting by Susan Fenton; Editing by Nick Macfie)