According to a recent study by the Hay Group of Korn Ferry, the real salary growth in India since 2008, stands at a dismal 0.2%, despite the GDP (Gross Domestic Product) of the country growing by 63.8% during the same period. India occupies a unique position in this study, for the salary growth has been the most unequal in the world since the global economic recession eight years back. The insights on the growth in wages at different levels (entry-level, professional and senior), were drawn from Korn Ferry Hay Group’s PayNet database, which contains the salary and job data for more than 20 million workers, spanning over 25,000 organisations and 110 countries. The economic data of CPI (Consumer Price Inflation) and GDP were sourced from Economic Intelligence Unit. The juxtaposition of these two sets of data reflected a mixed salary growth since the global economic dynamics was changed in 2008.
Who fared the best?
- In terms of real salary growth, China topped the list by registering a 10.6% growth in the real salary. Indonesia (9.3%) and Mexico (8.9%) followed in close.
- Canada on the other hand, had the best salary recovery among the developed countries, and also had one of the most equal salary growth for entry-level (5.1%), professional (8.8%) and senior (7.8%)positions, averaging to a total of 7.2% growth, with a growth of 11.2% in its GDP.
Who fared the worst?
- Several developed and developing countries has data that was reticent, or in negative. While Turkey (- 34.4%), Argentina (- 18.6%) and Russia (- 17.1%) and Brazil (-15.3%) had the worst real salary growth since 2008, despite some of them registering a double digit GDP growth.
- United States of America witnessed one of the worse salary recoveries among the developed nations. The real salary growth was (-) 3.1%, in spite of a GDP growth of 10.2% since 2008 (average adjusted for inflation). The salary growth at entry level positions was the hardest hit (-14.8%), with professional (2%) and senior (3.5%) positions faring better.
How were the Indian numbers?
- Commenting on the Indian data, Benjamin Frost, Korn Ferry Hay Group Global Product Manager said, “Of the countries we looked at, Indian wage growth was by far the most unequal – people at the bottom are 30 per cent worse off in real terms since the start of the recession; whilst people at the top are 30 per cent better off.”
- India witnessed a decline of 30.1% and 2.5% of real salary among Entry-Level and Professional positions since 2008, whereas senior positions saw a real salary growth of 33.1%.
“Strong wage growth for senior jobs is mostly because of skill shortages for key professional and managerial roles; and the increasing connection to a more globalised pay market at the senior levels – a market where India still pays less than most countries, but is catching up fast. India has made less progress than some other countries in bringing high value jobs to the country. This has led to poor job growth, therefore an oversupply of un/semi-skilled people, and poor wage growth,” Frost said.
Regarding the poorer wage growth at the bottom, the report noted that it is more because of an oversupply of people. “Most emerging G20 markets stood at either one end of the scale or the other either amongst the highest for wage growth, or amongst the lowest. However, India stood right in the middle, with all the mature markets,” the report said.
How did other countries fare?
Here is how a few other countries performed:
- Australia – Overall Salary growth: 5.9%; GDP growth: 18.8%
- Germany – Overall Salary growth: 5%; GDP growth: 6%
- Japan – Overall Salary growth: (-) 1.9%; GDP growth: 2.1%
- United Kingdom – Overall Salary growth: (-) 0.1%; GDP growth: 7.9%
- South Africa – Overall Salary growth: 3.5%; GDP growth: 12.8%
“While overall, global economists point to this recovery as one of the worst in history, there are political, economic and social reasons for the disparate salary fluctuations in different countries. In the countries that are seeing tremendous salary growth, the issue is supply and demand. With countries like China seeing a whopping 75.9 percent GDP growth since the beginning of the recession, universities and corporations simply can’t train people fast enough. This leaves an acute talent shortage and points to the reason skilled employees are seeing steep pay increases.” Frost said.
The study brings to light the progress made by different countries since the 2008 crisis, and highlights the real impact it has made on people’s salary. While a lot of entry-level workers are worse off, senior position workers are mostly better off, a disturbing trend that India seems to be leading. USA’s slow recovery, coupled with disappointing data from Russia, Brazil, Japan and several other nations is a testimony to the serious and far-reaching consequences of the 2008 recession, the effects of which are continue to plague growth. Although several countries are struggling to turn it around, the incessant drive to achieve growth has overtaken a fundamental rule of sustainable development – equal, better yet, equitable growth. The worrying indicators suggest that the current course of recovery are widening the rift between different sections of employees, a trend if left unchecked, might as well be the core ingredient of an impending global workforce crisis.