Contact:
Ann M. Egan
816 556 4811
ann.egan[at]us.wmmercer.com

New York - November 12, 2001 - Despite unsteady economic conditions in many parts of the world, triggered in part by the decline of the US economy, most workers stand to make gains in buying power next year, according to a new report from human resource consultants William M. Mercer Companies LLC.

Mercer´s newly released 2002 Global Compensation Planning Report - which examines economic, employment, and pay trends in more than 60 countries - provides information that employers need to develop and manage their compensation plans globally.*   This year´s edition of the report shows that, in most countries, pay increases are projected to be 2% or more higher than the expected rates of inflation.   In other countries, pay increases will still outpace inflation, but by amounts of less than 2%, and in a handful of countries - including Colombia, Ecuador, Guatemala, and Russia - inflation is expected to be higher than projected pay increases in 2002.

"Our report continues to show a strong connection between economic conditions and pay increase budgets," says Lynne Delewski, a consultant in Mercer´s Global Information Services business, which produces the report.   "With inflation expected to be relatively flat again this year, pay increases are following suit."

One notable change in this year´s report, Ms. Delewski points out, is the absence of pay and inflation extremes seen in recent years.   "In 2000 and 2001, we reported inflation rates as high as 96% and annual pay increases of 65% or more in certain countries," she says.   "These situations have somewhat stabilized now, bringing both pay increases and inflation down considerably."   According to Mercer´s 2002 report, the highest inflation rates projected for 2002 are 28.4% in Turkey and 22.0% in Ecuador, while some of the highest pay increase projections are for Indonesia (15.0%-16.9% for various employee categories) and Ecuador and Honduras, both projecting 13.5% for all employee categories.

Regional differences

The 2002 Global Compensation Planning Report shows distinct differences in pay and inflation trends in different regions of the world.  

• North America.   Canada and the US are very similar in their 2002 projections.   Canadian employers project pay increases of 3.4%-4.0%, while the US expects raises of 4.2%-4.4%.   Both countries anticipate inflation of 2.2% next year.
• Central/South America.   Compared to other regions, both pay increases and inflation are expected to be relatively high in Central and South America next year.   Of the 15 countries included in the report, 10 expect inflation of 4.0% or more in 2002.   In addition to Ecuador at 22.0%, high inflation is anticipated in Venezuela (13.6%), Costa Rica (11.8%), and Guatemala (10.1%).   Correspondingly, pay increases in most of these countries are projected to be in the range of 5.0%-13.5%.   Argentina expects the lowest inflation in 2002 (0.5%), as well as the lowest pay increases (0.3%-1.0%).
• Western Europe.   Across the board, countries in Western Europe project both moderate inflation (1.4%-3.8%) and moderate pay increases (mostly in the range of 2%-5%) in 2002.   One minor exception is Ireland, still in a period of record growth, which projects pay increases of 7.5%.
• Eastern Europe.   Countries in Eastern Europe show a marked contrast to their counterparts in Western Europe.   Expected pay increases are much higher (in the range of 5.0%-14.5%) and projected 2002 inflation ranges from lows of 2.6% in Lithuania and 2.8% in Estonia to highs of 20.0% in Romania and 13.6% in the Ukraine.
• Asia/Pacific.   The Asia/Pacific region represents a broad mixture of economic conditions, which are reflected in 2002 projections.   At one extreme is Japan, forecasting deflation of -0.2% and pay increases of 2.8%-3.2%.   The situation in the Philippines is quite different, with inflation expected to be 5.4% next year, while salaries rise 13.0% or more.   And China, thanks to strong economic growth, is expecting inflation of just 1.4% in 2002, coupled with pay increases of 9.2%-10.1%.

"Many of this year´s report findings can be traced to how closely each country´s economy is linked to the US economy," Ms. Delewski notes.   "Japan, for instance, has been hit hard by the fallout in the US economy, while China, which is more self-dependent, has been affected less.

"These pay increase and inflation forecasts represent our best estimates of what we will see in 2002, but how they actually play out in many countries will have much to do with the health of the US economy," she adds.

The 2002 Global Compensation Planning Report is one of 450 surveys conducted annually by Mercer around the world on topics related to compensation, benefits, and expatriate information.   The report can be purchased online by using the "Shop" feature at www.imercer.com/infolink  or, in the US, by calling 800 333 3070.   The cost is US$450 for hard copy.

William M. Mercer Companies LLC, one of the world´s leading consulting organizations, assists employers in the areas of human resource strategy and implementation.   With more than 13,500 employees serving clients from 135 cities in 39 countries worldwide, the company is part of Mercer Consulting Group, Inc., a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago, Pacific, and London stock exchanges.

*         Data presented in Mercer´s 2002 Global Compensation Planning Report was collected before Sept. 11, 2001.   In light of economic repercussions from the terrorist attacks, compensation planning survey updates are being conducted in many countries.   New information will be posted to www.imercer.com as it becomes available.

Business writers and editors can reach Mercer consultant Lynne Delewski in Louisville, Kentucky, at 502 561 4516 for additional background and comment.   (Note:   The foregoing phone number is provided as a convenience to journalists and is not for publication.)

Visit Mercer online: wmmercer.com/us-news and imercer.com/infolink

Projected 2002 Annual Base Pay Increases and

Inflation Rates for 12 Major Countries

Country	Projected 2002       Pay Increases for Management Employees*	Projected 2002   Rate of Inflation
Australia	4.2%	2.4%
Brazil	7.5%	4.0%
Canada	3.7%	2.2%
China	10.1%	1.4%
Germany	3.0%	1.7%
Hong Kong	4.3%	2.6%
India	12.7%	5.9%
Japan	2.8%	-0.2%
Mexico	8.0%	5.0%
Russia	7.5%	13.0%
United Kingdom	4.0%	2.1%
United States	4.4%	2.2%

*           "Management" refers to employees with important supervisory and managerial responsibilities, usually at the higher levels within a business unit or organization.   Mercer´s 2002 Global Compensation Planning Report also includes data for other employee categories, including blue collar workers, white collar workers, and top management.

Source:                             William M. Mercer Companies LLC

                            2002 Global Compensation Planning Report

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