Employees at nearly a quarter of privately held businesses (PHBs) around the world could be worse off in the year ahead. Research from the Grant Thornton International Business Report reveals that 21% of businesses plan to offer no pay rise in 2009 while 3% of businesses actually expect to reduce pay. This is in contrast to only 10% of businesses expecting to increase pay above the rate of inflation.
The gloomiest salary predictions come from Asia Pacific where 29% of PHBs will offer no pay rise in 2009. In a market where labour is still plentiful and there has been a fall in demand for skilled workers, jobs are valuable and employees are easier to replace. In the most extreme case, Taiwan, 72% of respondents indicated that they would offer no pay rises in 2009. With only 10% of Taiwan businesses planning to increase salaries by the rate of inflation or above the prospects look particularly bleak.
By contrast, economies in the Nordic region appear prepared to be the most generous in the year ahead with 82% of respondents indicating that they intend to increase salaries by inflation or above compared with the global average of 64%. Denmark topped the league with 91% while businesses in Finland (89%) and Sweden (74%) had similar high expectations.
Said Alex MacBeath, global leader for privately held business services at Grant Thornton International, "In contrast to Asia Pacific, unemployment in the Nordic region has been low in recent years and there have been severe labour shortages. For these businesses the danger remains that they will lose good staff, and be unable to replace them, if they do not offer good incentives."
He continued, "Perhaps more worrying for employees is the 54% of employers intending to increase salaries only in line with inflation. With inflation rates falling around the world, salary increases in line with these rates may not offer much comfort to employees who are already struggling in the downturn."
Surprisingly, actual employment grew 0.5% globally on average in 2008 amongst the 7,200 businesses surveyed, although this is a drop in growth from 4% in 2007. Said Alex MacBeath, "With unemployment figures rising around the world, we are unlikely to see employment growth in 2009."
When asked about expectations for employment in the year ahead the majority of businesses expected to decrease rather than increase their staff numbers, with a global balance of -4% of businesses expecting to increase employment (compared to +33% in 2008). The most optimistic firms were in Vietnam (+60%), Botswana (+49%) and Armenia (+35%) where a positive balance of firms are expecting to increase employment in the year ahead. However, there is a significant negative balance of respondents expecting to increase employment in 2009 with the most pessimistic in Chile (-33%), Hong Kong (-35%) and Spain (-42%).
The Grant Thornton International Business Report is an annual survey of the views of senior executives in privately held businesses all over the world. Launched in 1992 in nine European countries the report now surveys over 7,200 PHBs in 36 economies providing territory, regional and global trend data on the economic and commercial issues affecting a sector often described as the 'engine' of the world's economy. Data for eight key industry sectors will be available for the first time in 2009. The research is conducted by Experian Business Strategies Ltd. Grant Thornton International donates US$5 to UNICEF for every completed IBR questionnaire, a donation of over US$39,000 in 2008.
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