Jan 2022 - Present 1 year 3 months. Clients depend on us for specialized industry expertise. This projection is followed by 2023 projections in the United Kingdom (4.0%), Germany (3.8%), and Spain (3.6%). A total of 1,220 companies representing a cross section of industries participated. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance. 6.4 Days. ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. More than ever, making the most of your capital means solving a complex risk-and-return equation. The average actual salary increase hit 4.9% in 2022, as compared to a 4.0% actual increase amount in 2021, among those organizations that granted increases in the top 15 economies around the world. Overall salary increases in the US will be the most since 2007, a survey of 1.550 organizations from workplace consultant Willis Towers Watson (WTW) found, and above the 4.2% increase for this . Copyright 2023 WTW. The global pandemic affected the U.S. economy beginning in early 2020. For more countries, budgets for the upcoming cycle have changed from increases projected earlier in 2020. Consider other important components of your Total Rewards package, including bonuses, long-term incentives, health and wellness benefits even career progression and learning and development opportunities. Years of Dividend Increase. Salaried employees are likely to get a bigger pay hike in 2023, with companies budgeting for an overall median increase of 10%, according to the Willis Towers Watson Salary Budget Planning Report. Early Fall may signal the beginning of autumn colors, pumpkin spice everything, and sweater weather for some. However, roughly one-third of participants have revised their 2022 projections upward and the 2022 average projected increase (as opposed to median) is 3.4%. The latest unemployment rate, as measured by the U.S. Bureau of Labor Statistics and reported at the time this article was written, is 4.2%. In fact, 67% of organizations reported increasing their total compensation spend in 2022 as compared to 2021. January 3, 2023. Dont risk underinsurance protect yourself against inflation now, Global Semiconductor Industry Survey Report, Top 5 employee compensation trends for 2021, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX), Preparing for the EU Shareholders Rights Directive. On the other hand, companies recognize they need to boost compensation with sign-on, referral and retention bonuses; skill premiums; midyear adjustments; or pay raises. Prioritizing and segmenting increases is vital for an appropriate return on investment. Only 3% of employers freezing salaries. Budgets in 2022 compared to 2021 ranged from 0.8 percentage points higher in Italy to 1.1 percentage points in Germany, to 1.4 percentage points in Spain. Your ability to manage risk is key to your thriving in an uncertain world. of companies globally increased salaries. 2021-2022 saw higher pay increase budgets. Note: This data is from multinational organizations with operations in Russia; data from local Russian organizations was not collected for the July report. For some companies, that kind of increase represents millions in investment. In another sign of a tight labor market, U.S. companies plan to give workers their largest pay bump in 15 years in 2023, with an average hike of 4.1%. It also is smart to review pay changes for the overall population (not just the same population) because that shows the true growth in compensation spend as increases in starting salaries for new hires also are factored into that analysis. Photo by Chris Welch / The Verge The average actual salary increase hit 4.9% in 2022, as compared to a 4.0% actual increase amount in 2021, among those . From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Finally, it will be more important than ever to educate both managers and employees on cost of living and inflation versus the cost of labor. Share. It dropped significantly throughout the rest of 2020. That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. Salary increases hovered around 3.0% for the past decade until the pandemic forced companies to trim budgets. Average salary for Aon Senior Client Advisor in Redruth, England: [salary]. Consider segmenting by employee level (e.g., hourly, professional, executive), performance level or even by areas in which youre having trouble attracting and retaining (e.g., digital talent). Limit the Use of My Sensitive Personal Information. White Plains, New York. The United States is projecting an average increase of 4.1% in 2023, which is aligned with the 2022 average actual increase of 4.0% the highest since 2008 and higher than 3.1% in 2021 and 3% in 2020. Consider other important components of the employer-employee deal including: Your actions can range from improving the employee experience to placing a broad emphasis on diversity, equity and inclusion initiatives or implementing greater workplace flexibility. January 28, 2022. Reliable market data that supports these critical decisions. Email author Lori Wisper and continue the conversation. Companies gave employees an average pay increase of 2.8% in 2021. Global Innovation and Product Development Leader, Rewards Data Intelligence, Average increase of salary budgets in 2023 forecasted by the 15 largest economies, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). The report summarizes the findings of WTWs annual survey on salary movement and reviews practices as a means of helping companies with their compensation planning for 2022 and beyond. Facing ongoing business and economic conditions in 2022, organizations around the world have been forced to stay current with whats happening in the employee marketplace and how that affects pay and then adapt accordingly. Roughly the same number (17%) will raise funds by increasing prices, and 12% will resort to company restructures and reducing staff head counts. Hatti Johansson Actual salary increases reported in July 2022 were notably higher than both actual 2021 increases as well as initial 2022 projections. All rights reserved. 41% of organizations will have a higher salary increase budget in 2022 than 2021. With more money at play than has been the case in nearly 20 years, it is critical to align your priorities to the salary increase budget you establish (which, of course, should be based on sound market data). Bonuses for support staff and production and manual labor employees averaged 8.0% and 5.5%, respectively. Specifically, Willis Towers Watson found in July that companies project executives, managers and other professional employees will receive average salary increases of 3% in 2022, compared to the . The group of hyper-inflation countries (e.g., Argentina, Turkey) experiencing hyperinflation of 30% or more are in a different category altogether. Your ability to manage risk is key to your thriving in an uncertain world. If so, then focus your actions on leveraging salary budgets to adjust any major diversity, equity and inclusion issues (including a fair pay analysis) and prioritizing in-demand and business-critical talent. Salaried employees are likely to get a bigger pay hike in 2023, with companies budgeting for an overall median increase of 10%, according to the Willis Towers Watson Salary Budget Planning Report. In 2020 when the pandemic began, Fusco adds, just . Approximately 18,000 sets of responses were received from companies across 130 countries worldwide. ARLINGTON, VA, January 13, 2022 - Fueled by tight labor markets, U.S. employers are boosting their original salary increase projections for 2022 as the Great Resignation shows no signs of abating. For example, Indias salary budgets continued climbing from 8.2% in 2020 to 8.7% in 2021 and finally 9.9% in 2022. Employees in the following five industries are expected to see the largest salary increases in 2022 compared with their actual increases in 2021: Theres a great reprioritization of work, rewards and careers under way, and its putting significant pressure on compensation programs for many employers, said Catherine Hartmann, North America Rewards practice leader, WTW. (EDGAR Online via COMTEX) -- ITEM 7. In fact, most markets pushed their original forecasts to budgets that are higher than have been seen in nearly 20 years. While companies are boosting salary budgets, bigger pay raises alone wont be enough to help address their attraction and retention challenges. All rights reserved. Nearly half of companies (46%) are planning or considering improving the employee experience to address inflationary pressures and drive retention. "2023 promises to be another banner year for employees seeking salary increases," says Chris Fusco, senior vice president of compensation at Salary.com. Your ability to manage risk is key to your thriving in an uncertain world. ARLINGTON, VA, January 13, 2022 Fueled by tight labor markets, U.S. employers are boosting their original salary increase projections for 2022 as the Great Resignation shows no signs of abating.That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. While countries where there is centralized union negotiations (e.g., Germany, Spain) or mandatory indexation (e.g. Share this article. Unlike the financial crisis of 2008 to 2010, when virtually every industry was impacted the same way, the economic fallout of 2020 was a health crisis certainly, but financial systems remained sound and strong. Though employees want higher wages to mitigate the cost of living, as organizations prepare for 2023 they need to balance cost management with employee attraction and retention efforts by taking multiple actions to keep employees and those actions must go beyond pay increases alone. The average job hopper receives a 10% - 20% increase in salary every time they move Click to return to the beginning of the menu or press escape to close. Frontline hourly workers: Cant get them. Thats according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. Even with these ongoing pressures, pay increases and the salary budgets that fund them must be allocated in line with market conditions and directed by clear business priorities. According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. Taking a holistic view will ensure your salary increase process is transparent and emphasizes the connection between salary increases and business performance. Belgium), your salary increases will need to follow the guidelines. Mar 2015 - Present8 years 1 month. Also, remember that every organization will have its own set of goals and priorities. Although it's a new recent high, it's not by much: Companies, on average, are budgeting a 4.1% salary increase for 2023, just above this . The 2021 General Industry Salary Budget Survey found only 3% of companies are not planning to boost salaries next year, a drop from 8% that didnt give raises this year. Lead Associate. End of main navigation menu. Modern Slavery Act Transparency Statements, Data Processing Protocol - Investment Consulting UK, Transactional and Advisory Services Privacy Notice, COVID-19 FCA Business Interruption Test Case, Concerns related to cost management, such as inflation or rising cost of supplies (48%), Anticipated stronger financial results, actual or forecasted (43%). All rights reserved. End of main navigation menu. Companies gave employees an average pay increase of 2.8% in 2021. Supplemental tactics including sign-on bonuses, equity and cash retention, and recognition enhancements plus employee experience drivers such as enhanced career enablement, emphasis on mental wellbeing, focus on DEI [diversity, equity and inclusion], and learning and reskilling opportunities can combine to improve the effectiveness of a compensation program. Global pension assets record largest annual decline since the global financial crisis. Today, a discussion on salary budget projections in the U.S. cannot exclude the notion of how or, more importantly, whether inflation should be factored into salary increase budgets. In July 2022, organizations in the 15 largest economies projected increases of 4.6% in 2023, however the December 2022 SBP tells a different story, with 2023 projections closer to 5.5%. Willis Towers Watson Survey. In Europe, projections for 2023 salary increases are also well above 2022 actuals with the highest increases in Belgium (10.5%), the United Kingdom (5.1%), Germany (4.6%) and Spain (3.6%). Remember that a one-size-fits-all approach wont work. Together, we unlock potential. A total of 1,004 U.S. employers responded. Yet, salary increases still will need to be allocated in line with market conditions and influenced by clear business priorities. Most (if any) of these are not factored into a merit budget or the data reported for salary budget projections. Organizations have had to adjust their projections as global labor market challenges have unfolded. All rights reserved. Organizations in smaller economies shared a similar fate, mostly averaging similar salary budgets in 2021 when compared to 2020. The UK has . 2022 saw the highest salary budget increases in nearly 20 years. Finally, consider other payments you may have made during the year, like retention bonuses or recognition awards. of organizations around the world reported that 2022 salary budgets were higher than their 2021 compensation planning cycle. For example, if pay for the same population from 2020 to 2021 was analyzed, it is likely that the findings would show a spend well above the 3% reflected in a salary budget that was planned for that same time. We have answers, Limit the Use of My Sensitive Personal Information, Concerns related to cost management, such as inflation or rising cost of supplies (57%). US respondents to Payscale's survey project an average exempt employee salary increase of 3.8 percent for 2023. Beyond competitive salaries, which are table stakes at the moment, companies also need to focus their spend on a diverse set of health, wealth and career programs to drive employee engagement, said Hartmann. Within some industries, base . "While companies are boosting salary budgets, bigger pay raises alone won't be enough to help address their attraction and retention challenges. 2021. Unparalleled salary benchmarking database Each year, we collect salary data on over 35 million employees in more than 11,000 organizations, across more than 130 countries. More than ever, making the most of your capital means solving a complex risk-and-return equation. Sources: 1990-1994 Data: American Compensation Association Salary Budget Survey. 2022-2023 is shaping up to be . To tackle the competitive labor market, more than half of respondents (57%) have hired candidates higher in the relevant salary range, while a further 76% have adjusted or are considering adjusting salary ranges more aggressively, increasing ranges by 2% to 5%. One common theme to remember: Even with an increased budget, it is important to segment your workforce as you consider your goals. However, remember: Even with an increased budget, it is important to segment your workforce as you develop your goals. For instance, as a result of recognizing that labor shortages, and not inflation, are the primary driver of growing salary budgets, many employers are targeting certain segments such as hourly workers, digital talent and workers with in-demand skills to receive higher pay.. That projected wage growth is faster than actual raises paid in the prior . see the December . Case in point: WTW's July 2022 Salary Budget Planning Survey results show that 96% of companies globally increased salaries (compared to 63% in 2020), and overall budgets have increased significantly over prior years. Click to return to the beginning of the menu or press escape to close. Nearly three in four respondents (74%) cited the tight labor market for increasing their budgets from prior projections, while only one-third cited anticipated stronger financial results (34%) and inflation or the rising cost of supplies (31%). Your ability to manage risk is key to your thriving in an uncertain world. Copyright 2023 WTW. (assessment salary increase, promotion . You could consider one-time payments for lower-level or lower paid employees like production workers, or targeted base salary increases or retention or recognition awards for critical or at-risk talent. A total of 1,220 companies representing a cross section of . Also, the United Kingdom, Spain and Mexico saw increase budgets of 1.0 to 1.2 percentage points higher in 2022 compared to 2021. The 15 largest economies are forecasting an average increase of 4.9% in 2023, which is 0.9 percentage points higher than the 4% actual increase in 2021 and aligned with the 4.9% average increase granted in 2022. In these cases, organizations are taking a range of actions, including more frequent pay increases, cost-of-living adjustments and even linking salaries and/or bonus payments to foreign currencies. Most organizations globally are reporting an uptick in their median total salary increase budgets for 2022 vs what they had planned in 2021.