UK salaries are forecast to increase by 1.3 per cent in 2024 in real terms as UK businesses expect to repeat a higher than usual nominal pay increase of 5 per cent, according to the latest annual Salary Trends Report by global mobility expert, ECA International (ECA). This equates to an average salary boost of £447 – the highest real-terms increase since the 1.7 per cent received in 2020 – should inflation drop to 3.7 per cent as anticipated.
The UK currently ranks 28th globally and 7th in Europe for real-terms salary increases forecasted next year, outpacing the expected average global rise of 1.0 per cent.
ECA has conducted its Salary Trends Report for 23 years and analyses data from over 360 multinational companies in 68 countries. Real salary increases are calculated by subtracting the relevant inflation percentage from the nominal salary percentage increase forecasted by businesses in each country. All salaries are calculated before tax.
Oliver Browne, remuneration and policy surveys manager, explained: “UK workers have had a difficult few years, with the economic impact of the Covid-19 pandemic immediately followed by the surge in inflation after Russia’s invasion of Ukraine wiping out any real-terms gains of their pay increases. Now that inflation is finally expected to fall below 4 per cent, employees in the UK should be able to look forward to their first real-terms pay increase since 2020.”
While inflation in the UK is falling more slowly than the likes of Germany, Switzerland and Italy, the nominal salary increase forecasted by businesses in the UK is higher, causing the UK to overtake them in rank for real salary increases next year. Real salaries in the UK are anticipated to outperform those in many other European countries, rising 0.4 per cent higher than the 0.9 per cent European average.
Browne added: “With inflation so high, many businesses in the UK have been unable to offer their employees pay awards to match. Nominal increases are expected to remain higher than usual next year despite falling inflation, suggesting some companies may instead be spreading larger increases over a longer period.”
Despite falling rates of inflation, Europe is expected to continue to trail behind the rest of the world for real-terms pay increases at 0.9 per cent on average, compared to Asia Pacific’s forecasted 2.2 per cent average increase. Employees in Europe are forecast to receive the lowest global nominal pay increase on average next year.
