Mercer’s Global Compensation Plann-ing Report examines employment, economic and pay trends in 70 countries. Data on projected pay is taken from a survey of multinational companies, while inflation data is primarily taken from the International Monetary Fund and the Organisation for Economic Co-operation and Development.

A real boom? As a sceptical, and possibly underpaid, employee, you may not believe that these numbers mean anything. We asked Ambarish Raghuvanshi, CFO, Naukri.com, if these increases were real. "The fact of the matter is that salaries in India have been on the rise," he says. The IT and ITES sector fuelled the growth in the economy, and other sectors are now chipping in. Infrastructure, manufacturing, financial services, retail and pharma are all doing well. "In a boom like this, it is very hard to find good talent, and it’s all the more difficult to retain them. This is one of the reasons for high salaries in India," adds Raghuvanshi.

Fluctuations in oil prices, exchange rates and consumer confidence could affect salaries in 2006.

These high salaries are not restricted to top management, as was the case even three years ago. It’s now middle management’s turn to profit. Freshers too are in for a windfall. "Two-three years back, fresh management graduates even from B and C grade management institutes used to get entry-level salaries of Rs 1.5-2 lakh per annum. This has now gone up to Rs 3-4 lakh. An increase in entry-level salaries naturally has a cascading effect on the overall salary structure of a company," says Raghuvanshi.

Global trends. Among other countries in the Asia Pacific region, salaries in China are expected to go up 7.8 per cent (inflation 3 per cent). The hikes are likely to be far lower in Singapore (3.8 per cent with inflation at 1.5 per cent) and Hong Kong (3.2 per cent; inflation 1.1 per cent). Inflation in both Australia and New Zealand is 2.8 per cent, and salary hikes are expected at 4.2 per cent and 3.8 per cent respectively.

Among Europeon countries, salary increases in the West are likely to remain stable, while countries in the Eastern part can expect higher increases due to greater economic growth in those countries. The lowest pay hikes among Western EU countries are expected in Germany (2.1 per cent; inflation 1 per cent) while the highest will be in Greece (4.9 per cent; inflation 3 per cent). Among Eastern EU countries, Lithuania tops the table with an expected salary increase of 8.5 per cent (inflation 3 per cent), while workers in Poland can expect a hike of 3.1 per cent (inflation 2.6 per cent).

Salaries in both the US and Canada are forecast to increase by 3.6 per cent. However, employees in Canada will fare better, as inflation is 1.9 per cent compared to 2.6 per cent in the US. In Mexico, salaries are likely to increase by 5 per cent (inflation will be 3.9 per cent). Pay hikes in Central and South American countries are expected to be high, though the majority of these increases will likely be offset by high inflation.

Back home, Raghuvanshi expects the rise in salaries to continue for the next two-three years at least. But though the economic outlook for 2006 is positive, fluctuations in oil prices, exchange rates and consumer confidence could affect pay increase budgets for next year.