The average pay raise worldwide is expected to be 2.4 percentage points above inflation in 2006 compared with 1.9 percentage points in 2005, according to a survey by Mercer Human Resource Consulting.

Average pay in 7 in 10 (69 percent) of the countries the survey covered is predicted to increase by between 1 and 3.5 percentage points above inflation. The study also found a minority of countries will experience rises which are over double the global average. The greatest increases are expected in India, Egypt and Lithuania, where employees are forecast to receive pay rises of 7.3 percent, 7.1 percent, and 5.5 percent above inflation respectively.

Mercer's report covers economic and pay trends in some 70 countries worldwide. The company took data on projected pay from a survey of multinational companies and took inflation data primarily from the International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development.

Workers in Canada will fare better than U.S. workers because of higher inflation in the United States, according to the report.

"Despite the tremendous growth in the U.S. economy, many companies remain cautious in their approach to pay increases," says Robin Ferracone, president, Human Capital Business at Mercer. "Organizations continue to use variable pay such as bonuses to help retain talented employees, as they struggle to afford higher base pay levels."