There is great news for the salaried class of the country at the beginning of the New Year. According to a report by management consulting front Korn Ferry, salaries in the country is expected to increase in double-digits in 2019. The salary increase in the country for the year 2019 will be 10 percent in comparison to 9 percent in last year. The inflation-adjusted wage growth will be 5 percent compared to 4.7 percent in the previous year. “Consequent to rapid economic growth, India continues to enjoy the highest overall salary increases and real-wage growth in Asia,” said Navnit Singh, Chairman & Regional Managing Director, Korn Ferry India.
The @Korn_Ferry 2019 #Global #Salary Forecast reveals that, adjusted for inflation, real-wage #salaries globally are expected to grow only an average of 1 percent in 2019. What's expected in your region? https://t.co/Ot229gSYiG pic.twitter.com/b9zxZwK5MB
— Korn Ferry (@Korn_Ferry) January 16, 2019
The last four and a half years of Modi government has been best for the salaried middle class in recent past. The inflation-adjusted wage growth in India is forecasted to increase by 0.3 percent compared to last year while for China it will go down by 1 percent, from 4.2 percent last year to 3.2 percent this year. The wage growth reflects the macroeconomic condition of both countries. India, on one hand, is the fastest growing major economy in the world while China on other hand is crumbling under its own ambitions. The economic growth in China is slowing down, public as well private companies have started defaulting on corporate bonds and stimulus offered by the government of China failed to fuel the recovery.
Other than India, Asian countries where the wage is expected to grow at a good pace are Vietnam, Singapore, and Indonesia. Vietnam has come as the growth engine of fast-growing Southeast Asian economies, many global companies are moving their factories from China to Vietnam given the geographical and cultural proximity of the previously war-rotten country. The land and labor in Vietnam is cheaper compared to China and therefore global as well as Chinese companies are moving factories from China to Vietnam. The textile production and export in Vietnam has grown at a double-digit pace in the last few years. The inflation-adjusted wage is forecasted to grow at 4.8 percent in 2019 compared to 4.6 percent last year.
In Singapore and Indonesia, inflation-adjusted wage growth is expected to be 3 percent and 3.7 percent respectively in comparison to 2.3 percent and 3.4 percent last year. Southeast Asia and South Asia fuelled high wage growth in Asia. Southeast Asia and South Asia are the fastest growing region in the world in terms of economic upturn and therefore wage growth. The salaries in Asia are expected to grow at 5.6 percent compared to 5.4 percent last year. Inflation adjusted wage growth is forecasted to be around 2.6 percent down from 2.8 percent last year. The wage increment for the Asian continent is highest across the globe but it came down by 0.2 percent compared to last year. The slowdown was due to 1 percent downfall in growth in China and just 0.1 percent inflation adjusted wage growth in Japan. The two of the largest economies of Asia are slowing down, the growth in Japan has almost stagnated while in China it is slowing down.
The economic policies of the Modi government fuelled the economic boom in India even at a time when the global environment was not conducive. The structural reforms like Insolvency and Bankruptcy Code (IBC) and GST implementation are expected to further improve the macroeconomic conditions in upcoming years. The salaried middle class has been a major beneficiary of policies of the Modi government and this bourgeoning middle class will sustain the economic development of the country for long period.