India, China to see biggest jump in real salary as Asia-Pacific leads the way next year, report shows

As inflation continues to impact global economies, Asia-Pacific will be the only region to see real salary growth in 2023, a new survey has found. 

According to the annual Salary Trends Report by data company ECA International, the average real salary increase — which is nominal wage growth minus the rate of inflation — is predicted to increase by 1.3% in Asia-Pacific. 

That’s compared to other regions which will see drops in average real salary, the report showed. A decrease of 1.5% is expected for Europe, 0.5% for North and South America, and 0.1% for Africa and the Middle East. 

Eight out of the top 10 countries with the highest real salary increases globally are from Asia-Pacific this year, ECA international added. 

“With inflation increasing significantly in 2022, 78% of countries surveyed recorded a real salary decrease, and no European country saw a real-terms salary increase,” said Lee Quane, ECA International’s regional director. 

“Even though the global situation is expected to improve next year with higher nominal salary increases and lower inflation on average, a 0.5% decrease in real terms is still expected.” 

The annual report is based on information collected from over 360 multinational companies in 68 countries, said ECA international. 

In Asia-Pacific, India will see the biggest increase of real wages at 4.6%, followed by Vietnam at 4%, and China at 3.8% growth. 

The report also pointed out that most locations surveyed in APAC are expected to see the “same or higher” rates of real salary growth in 2023, just as they did in 2022. 

India is predicted to have the biggest increase of real salaries globally. That’s because of the Indian economy’s growth rate and “the need for salary growth to outstrip inflation,” Quane told CNBC Make It.

“Although inflation rates have grown in India in 2022 in comparison to 2021, salaries will increase at a faster rate in nominal terms.”

Workers in China are also amongst “a small group globally” who will receive the highest rates of real salary growth this year and the next, Quane said.

In 2022, salaries in China increased nominally by 5.9% and will grow by 6% in 2023. 

“Although nominal salary increase rates in China are not amongst the highest in APAC, low rates of inflation mean that workers there received the highest rate of salary growth in real terms,” said Quane. 

While Asia-Pacific will see fairer skies compared to other regions in 2023, not all countries in the region will celebrate. 

Countries like Laos and Myanmar will experience a “significant decline” in real salaries due to economic and political problems, said Quane.

In Singapore, even though workers will see a salary increase of 3.8%, inflation will reduce disposable income and set wages back by 1.7% in real terms this year, the report said.

ECA International estimates Singapore’s real salary growth will be 1% in 2023.

“Salaries will fall by almost 2% this year in real terms but workers in Singapore are not alone as those in eight other countries in the region will also experience a fall in the buying power of their salaries in 2022,” said Quane. 

As global inflation rates hit record-high this year, average worldwide salaries fell by 3.8% this year, when inflation was factored in, said ECA International. 

That’s despite a 4% increase of average salary and an expected 5% increase in 2023. 

“Even though the global situation is expected to improve next year with higher nominal salary increases and lower inflation on average, a 0.5% decrease in real terms is still expected,” said Quane. 

“Our survey indicates another tough year for workers globally in 2023,” he added.

“Only around a third (37%) of the countries surveyed are forecast to see real-terms salary increase, though this is better than the 22% that experienced increases this year.”