It’s good news for workers of India, while the Vietnamese and Chinese have reason to celebrate. Closer to home, Bulgarians and Turks should be laughing, but it’s not so good for the Brits, or indeed Germans and French.
Earlier this week, human resources group Mercer released its projections for wage increases next year. India should really be celebrating, because Mercer is predicting wage increases of 14.1 per cent in the economy of the sub-continent next year. Inflation in India is expected to run at 4.3 per cent, so even after allowing for inflation, wages will be rising at an impressive 9.8 per cent.
Meanwhile, Mercer is forecasting wage inflation of just 3.1 per cent in the UK, but after adjusting for an expected CPI rate of inflation of 2 per cent, your average Brit will be just 1 per cent better off.
Well, actually it will be even worse than that, because this CPI measure for inflation is really not that good. The Retail Price Index gives a much better idea of what is really happening, and last month this was rising at 4.2 per cent, so actually, it would appear that your average Brit will be worse off next year.
Global salaries are expected to rise by an average of 6 percent in 2008. 1.9 per cent above inflation, says Mercer. Countries that expected to see real wage rises in excess of 3 per cent include, India, Vietnam (5.6 per cent), Bulgaria (4.9 per cent), Turkey (4.5 per cent), China (4.3 per cent), South Korea (3.9 per cent) and Romania (3.3 per cent).
The US is expected to see wage rises after inflation of 1.9 per cent which is actually pretty good, so maybe the downward pressure created by subprime woes could be cancelled out by the upward effect of positive wage rises.
As for the UK, perhaps a more telling measure is disposable income. According to a recent report from Ernst and Young, our discretionary income is at its lowest level in five years. It says the average household now has £837.53 to spend each month after total fixed monthly outgoings, that’s after things like mortgages, council tax, petrol and utility bills, compared with £898.54 in 2003/04.
It seems that globalisation is having the effect of reducing the gap between workers in the developing world and workers in the developed world. Actually, the net effect is fairer, but it is worth bearing in mind that while the UK has benefited from globalisation, and while business has done well, your average worker in the UK is actually worse off.
In this globalised world, capital is enjoying better rewards, labour lower rewards. Only by ensuring the public benefit from greater corporate profitability, perhaps through holding stakes in business via their pensions, we can ensure that the greater wealth globalisation brings truly trickles to the average man and woman in the street.
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