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Wages to rise 2.5% as UK workers see bigger increases than Europe, report says

Wages will increase by 2.5% next year despite the economic and business uncertainty caused by Brexit, a new report has predicted.

With inflation forecast to be around 0.6%, real wage growth will be 1.9%, said the Korn Ferry Hay Group.

Pay rises in the UK will be higher than the average across Western Europe of 1.7%, according to the advisory group.

Its global study found that workers in Vietnam will enjoy the biggest pay rise at 7.2%, while those in countries such as Venezuela, Argentina and Egypt will see their wages fall.

Ben Frost, of the Korn Ferry Hay Group, said: "When it comes to pay rises in the new year, workers are still better off in the UK rather than France or Germany.

"But across the Western world, including North America and Australia, we're entering a new era in pay, characterised by restrained growth coupled with higher inflation.

"Company pay policy is typically slow to react to macro-economic shifts, but right now businesses cannot afford to be complacent. Inflation is going to rise, and companies will be forced to decide what will bear the brunt of this.

"Do they suppress pay and leave employees out of pocket? Or do they place the squeeze on their own profit margins? If wages do not increase in line with inflation, companies could risk losing their key talent."

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