Companies to freeze salaries this year: Global survey

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Aswathy.C

16 April, 2009

According to a global survey by ECA International, one quarter of all the companies in the world and 40 per cent in the United States, plan to freeze salaries this year, whereas employees in South America and India can look forward to hearty rise.

DUE TO the global financial crises, the companies are planning to freeze salaries of employees as a method of sustenance. According to a global survey by London-based research company ECA International, one quarter of all the companies in the world and 40 per cent in the United States, plan to freeze salaries this year, whereas employees in South America and India can look forward to hearty rises in their salaries.

The survey was drawn from the inputs of 53 countries. The survey conveys that salaries should increase by 4.7 per cent this year down from a 6.2 per cent rise last year.

Employees in Japan, Lithuania and Ireland will have the lowest pay hikes. In Japan, half the companies are planning to freeze salaries. The US is expected to have only a rise of 2.8 per cent rise and 40 per cent of firms will freeze pay. Canadian companies are slashing raises by 75 per cent. Salaries in Singapore, Hong Kong and Western Europe will increase by two per cent. In Eastern Europe they will increase by fewer than five per cent. 29 per cent of European companies are planning to freeze salaries this year.

The situation is completely opposite in companies in Venezuela, where the highest wage increase is expected this year, averaging 24 per cent, followed by Argentina where the pay is set to increase by 12 per cent.

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India is expecting a 10.8 per cent increase in salaries this year which is mainly due to talent shortage. Vietnam is expecting a rise of 10.6 per cent and Indonesia is expecting a rise of nine per cent in this global financial year. The main reason for the salaries to increase in these countries is inflation.

“There is still a huge demand for talent in India which is keeping salary increases high despite the current economic situation. While in Vietnam and Indonesia persistently high levels of inflation are keeping increases up,” Lee Quane, ECA’s Asia director said according to the sources.

Pay hikes in Brazil, Latin America and Chile will also be higher than last year. China is also expecting pay hikes in its mainland due to talent shortage.

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

The 10 countries which can expect the highest salary increases in a descending order are: Venezuela, Argentina, India, Vietnam, Egypt, Indonesia, Russia, Romania, South Africa and Latvia. And the 10 countries which will hit the bottom in the salary hikes are Hong Kong, Singapore, France, Taiwan, Sweden, Switzerland, Canada, Irish Republic, Lithuania and Japan.