Global salaries are expected to rise by an average of 6 per cent in 2008.

This is according to the 2008 Global Compensation Planning Report study by consultancy Mercer.

Highest pay increases are expected in India at 14 per cent, almost 10 per cent above local inflation, with the lowest pay increases in North America and Western Europe.

Steve Gross, worldwide partner and global head of broad-based performance and rewards consulting at Mercer, said: “We are starting to see that short-term cost savings from sourcing labour in emerging markets can evaporate over time. It is therefore essential for multinational companies to consider both current pay levels and future salary increases when deciding where to source their labour.”

UK pay is projected to increase by 3.1 per cent, which is 1.1 per cent above inflation.