As 2016 global financial budgeting and compensation planning approaches, it is timely to support ERI readers with insight into compensation analytics by taking a look at predictions for the world economy and its effect on 2016 salary increase budgeting.
An analysis of early projections of 2016 salary increases across 56 countries is provided in Table 1 to support businesses in next year’s salary increase budgeting.
When developing a salary increase budget, it is valuable to review statistical trends within each country and to consider not only the prior percent market movement of salaries, but also increases and decreases in the CPI, unemployment rates, and GDP.
Traditionally, a salary increase budget would typically be 1-2% above the change in the country’s CPI. However, since salaries tend to respond more slowly to changes in the cost of living, salary increase budgets may lag changes in CPI.
As a best practice, salary increase budget recommendations should be reviewed twice a year—once early in the financial budgeting process, around mid-year, and then later in the financial budgeting process for finalization and approval.
