A Currency Exchange: Don’t Get Tripped Up by International Compensation Practices

By Andrea Park

Jul. 28, 2014

India, China and Brazil had the highest average salary budget increases in the world this year, but that doesn’t mean Americans should be fleeing to Asia or South America just yet.

According to top-level data from the WorldatWork 2014-2015 Salary Budget Survey, India’s salary increase budget was 10.5 percent, China’s was 8.2 percent and Brazil’s was 7.2 percent. Comparatively, the U.S., along with Canada, Germany and the United Kingdom, reported a 3 percent increase.

What does this gaping difference mean for the American workforce? Not much, according to Alison Avalos, research manager at WorldatWork.

“We really don’t think there’s necessarily anything happening with these global members to drive U.S. numbers up or down,” Avalos said. “There are unique circumstances at play in each of these countries.”

It’s important to take into consideration factors like wage base, median income, and economic and labor market stability in each country, Avalos said. The isolated data don’t prove that a certain country is better off than another.

“People look at this data and think they would rather work in India or Brazil, but they need to keep in mind, for example, that the U.S. economy is actually quite a bit more stable and our median income is quite a bit higher than theirs,” Avalos said.

Doug Harris, CEO of the Kaleidoscope Group, agreed that other countries’ salary budget increases, for the most part, don’t have a significant impact on the U.S. In fact, Harris said, America’s salary budget numbers aren’t even of the utmost importance to the U.S. workforce.

“As your career progresses, salary has less of an impact on total income,” Harris said. “It becomes more about the whole package, where components like incentives, bonuses and flexibility come into play.”

According to Harris, the U.S. has also shifted in salary’s importance to overall workplace happiness. “Fifty years ago, salary was the most significant factor in employment satisfaction, but now it’s probably third or fourth on the list,” he said.

So while keeping an eye on worldwide salary shifts is definitely important in cultivating a better awareness of the state of the global economy, don’t expect the seemingly high performance of countries like India, China and Brazil to send your employees running: There are plenty of components besides salary, like benefits and culture, that have a hand in attracting and retaining workers.

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