The forecast of high inflation that analysts have for this year is leading companies to rethink their payroll strategies. In this sense, according to a private survey, Most companies already plan to implement -at least- four hikes throughout 2023.
The range of raises that companies intend to grant is 88.9% to non-agreement personnelaccording to the latest Spot survey conducted by Mercer, the global human resources consultancy.
It happens that companies make these projections taking as a reference an estimated annual inflation of 97% based on private sources. Considering these data, the salary increase for non-contracted personnel would still be a few points below inflation, as has been the case in recent years.
In 2022 companies granted a 90% raise to non-union staff and assumed 95% annual inflation.
As regards the number of planned increases, 47.4% will grant at least four increases in the year; 18.5% of companies will grant 5 raises; 16.6% will provide 3; 14.2% will provide six or more corrections in the year, while 3.3% will provide only two.
April, July and October are the months in which most companies grant raises, followed by January, March and September.
According to Ivana Thornton, Mercer’s Career Director for Argentina, Uruguay and Paraguay, “in general, the more uncertain the economic environment, the more wage review cases the market raises”, commented on the results of the study.
In terms of expected wage increases from each sector, the 10 sectors that expect to grant the largest increases compared to the broad market are:
- Engineering and Construction (103.01%);
- High Tech-Services, software and electronic commerce (102.05%);
- Energy (100.51%);
- Life Sciences – Medical Devices and Equipment (100.48%);
- Fintechs (97.44%);
- High Tech(Services) – IT consulting services and solutions (96.56%);
- Life Sciences – Combination or Other (96.01%);
- High Tech (Services) Telecommunications services (95.60%);
- Energy-Oil & Gas (95.31%);
- Banks (95%)
The data comes from the consultant survey which took place from 3 to 10 February 2023 in which 340 companies participated.
As for the salary trend in the first quarter of this year, the result was not so bad for employees, according to the consulting firm Ecolatina. In a recent report, he explained that “despite the two inflationary shocks of 2022, the formal real salary (private and public) showed a slight recomposition in the 2022 average (+0.7%)after going through four consecutive years in the red (-20%)”.
“This improvement was concentrated in the first half of 2022 (+2.9% y/y), while a negative performance was recorded from the second half (-1.3% y/y), iIt was affected by the sharp acceleration in prices. Despite this, with the temporary slowdown in inflation at the end of last year only in December recorded real wages returned to a positive value on an annual basis (+0.5% on an annual basis.)”
“However, this improvement was temporary,” the consultant continued. “If a more short-term perspective is taken, it can be argued that the monthly gap between wages and inflation could be the largest in months, when a sort of “creeping anchoring” of wages to prices was in place. In this sense it could also be considered that the year-on-year comparison will show, at best, a break-even between prices and formal wages until March”.
AQ
Source: Clarin
