One of the most important things that affects our financial lives is our level of income.
When you're a business owner there are many factors that can affect how much money you make from the business. However, when you're an employee the main thing you're looking for is a pay rise.
Asurvey of 251 CEOs has revealed that 40% of them plan to limit pay rises to between 0% to 2% according to reporting in the Australian Financial Review.
Another third of the CEOs plan to give pay rises of between 2% to 3% whilst just 14% expect to grow wages by 4% or more.
Obviously a mitigating factor for these low numbers is that inflation is running at a very low level. So, a wage increase of 2% with 2% inflation has the same effect as a 3% pay rise with 3% inflation. Some businesses are being generous such as Westpac Banking Corp (ASX: WBC) employees receiving a pay rise of more than 3%.
Various studies and indeed job advice has shown that jumping between positions creates better wage growth than sticking around for a long time, which is a shame that loyalty generally doesn't pay over the long-term.
Whilst businesses might just think of wages of costs, they become the income of other businesses when employees spend the money, so lower wage growth does have a knock-on effect to other areas of the economy.
One of the main problems that employees face these days is that large businesses are investing heavily in automation to reduce their labour costs. This will also have an effect of keeping the lid on wage growth.
Foolish takeaway
Don't feel completely at a loss if your wages aren't growing much. Inflation is low, you could consider changing jobs and there is always the possibility of investing in the businesses yourself to benefit from automation.
