2012 salary increases: Europe lagging behind

As the euro zone crisis drags on, salaries in Europe, Africa and the Middle East will have a hard time keeping up with inflation. Canadian employees should fare better, with an average increase of 3.1%.

In October, British consulting firm Mercer published its salary increase forecast of 2.7% for Western Europe and 5.7% for Central and Eastern Europe. The study of the intentions of some 329 organizations shows that while the salary increases are tangible, they are not enough to make up for the still-galloping inflation in these areas. The indices are timid and in addition, far behind the average increases of 7% expected over the same period in Africa and the Middle East.

Britain, Norway, Finland, Germany and France should each have salary increases of only 3% next year; the inflation rate already observed between 2009 and 2011 is far above this.

At the same time, salaries in Algeria will increase by 7%, in Uganda by 11% and in Pakistan—the big winner—by 15%.

The reasons cited by European respondents for their cautiousness include the economic difficulties related to the European debt crisis, which directly affect the entire continent, and prevent companies from committing to fixed costs such as salaries.

Canada: A more favourable situation
Canadian employers, also questioned by Mercer, for their part forecast an overall increase of 3.1% in base salary for 2012—far from the 4% posted in 2008 in an already delicate context. The main reason for this declining index is the strong fluctuation of stock markets, an unavoidable collateral effect of the recent European difficulties. Despite everything, Canadian salaries in 2012 should match inflation, estimated at 2.6% across the country.