In 2019, German Salaries Are Forecast to Rise by an Average of 3.1 percent

In 2019, salaries in Europe and worldwide are forecast to rise, in some cases significantly. The steepest nominal pay increase will be in Poland (3.8%), with Austria (3.2%) and Germany (3.1%) slightly behind. At the other end of the scale, the forecast salary growth for Switzerland is far lower, at 1.2%. Salaries in Western Europe are set to rise by 2.5% on average, with inflation expected to be in the 0.9% to 2.7% range. Accordingly, real wage increases of 1.1% for Germany, 0.9% for Austria, and 0.3% for Switzerland are predicted. Only the Netherlands is expected to see salaries stagnating, with real wages remaining at the previous year’s level, which puts the country at the bottom of the rankings for Western Europe. These are the findings of the 2019 Salary Forecast by the HR and management consultancy Kienbaum. The forecast presents an overview of salaries in 32 selected countries, based on over 1,000 respondents from companies of different sizes and from various sectors.

“Highly qualified professionals will enjoy especially favorable conditions for salary negotiations in 2019,” according to Alfred Berger, head of the compensation and performance management department at Kienbaum’s Vienna office. “Global economic growth is driving up salaries very sharply in some cases, helped along by full order books and the shortage of trained professionals in almost all major economic centers worldwide.”

Global shortage of qualified professionals gives them an advantage in salary negotiations

In Europe, the predicted salary increases vary significantly according to hierarchical level: in Germany and Poland, specialists and professionals will enjoy the biggest pay rises, at 3.3% and 4.0% respectively, and their pay packages are set to increase by an average of 3.7% in Austria too. Swiss professionals can expect the lowest salary rises, at 1.3%. In middle management, the biggest salary increases are predicted in Poland (3.7%), Austria (3.0%), and Germany (2.8%). At executive board level, the highest increases are forecast for Poland (3.6%) and Germany (3.5%), with Austria on 3.2%, while Switzerland again comes in last place on 1.3%.

In Eastern Europe and Turkey, salaries are going up faster than in Western Europe

In Eastern European countries, salaries are predicted to rise by an average of four percentage points across all hierarchy levels, which is substantially higher than in Western Europe. The pay increases range between 2.3% and 7.3%, while inflation is expected to be between 1.6% and 10.3%. The steepest nominal salary increases are expected in Turkey (7.3%), with Russia just behind (5.7%). The lowest increase is forecast in Croatia (2.3%). The ranking looks very different when the (in some cases very high) predicted inflation rates are taken into account, with real wages far lower than the nominal forecasts. The highest increases in real wages are expected in Ukraine (2.5%) and Russia (1.7%). At the bottom is Turkey (–3%). “In countries with very high inflation rates, high nominal salary increases are pretty much a matter of course, and so are tied less strongly to an individual’s or company’s performance,” according to Alfred Berger, who headed the study.

Real wages are growing fastest in India

Among the ten non-European countries selected for the study, the highest nominal salary increases will be in India (7.6%), followed by South Africa (5.9%) and China and Mexico (both on 5%). The highest inflation rates are forecast for South Africa (5.2%) and India (4.4%), but incomes are expected to increase in real terms in all ten analyzed countries.

Executive board members and executive directors in these non-European countries have cause to celebrate, especially in India where they can expect their pay packages to go up by 7.1% and in Mexico and South Africa where the predicted increase is 5.7%. The USA comes in the middle of the pack (3.6%), while the lowest board-level salary increases are predicted in Japan (2.3%).

For the first time, the main determinant of salary rises is individual performance

Unlike last year, when the main driver of salary increases was company turnover, in 2019 the most important factor in Western Europe will be individual performance. Regional exceptions are Germany and the UK, where pay rises are still more strongly linked to company performance.

In India, South Africa and Japan, adjustments for inflation play a key role in salary increases. According to the qualitative data from the 2019 Salary Forecast, other factors affecting salary trends are unemployment and a shortage of skilled professionals in Eastern Europe, and benchmarks in Western Europe, Japan and the USA.

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The full results of the study are now available to order at https://shop.kienbaum.com/ at a cost of €250 (plus VAT).

The Kienbaum 2019 Salary Forecast presents an overview of salaries in 32 selected countries, based on over 1,000 respondents from companies of different sizes and from various sectors. As well as the latest salary trends, the study summarizes expected inflation rates for 2019 so that it can give figures for both nominal and real-term income increases for each country.

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