Consider other important components of your employer-employee deal, including bonuses, long-term incentives, health and wellness benefits, career progression, and learning and development opportunities. At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. 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. Its easy to forget that salary increase budgets are driven by several factors and, as such, should be viewed as one piece of a larger picture. Our unique perspective allows us to see the critical intersections between talent, assets and ideas the dynamic formula that drives business performance. The second-gen Sonos Beam and other Sonos speakers are on sale at Best Buy. 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. 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. EMPLOYERS in the Asia-Pacific plan to give the highest 2022 salary increases compared with North America and Western Europe, which are expected to stay flat, according to findings from a Willis Towers Watson survey. Companies are now budgeting an overall average increase of 3.4% in 2022, compared with the average 3.0% increase they had budgeted in June 2021. Employers looked to 2021 with optimism and an eye toward recovery, but many organizations around the world had to adjust to tumultuous business conditions that emerged from the pandemic. According to the survey, companies project average salary increases of 3.0% for executives, management and professional employees, and support staff in 2022. Salaries at Willis Towers Watson range from an average of $49,528 to $127,613 a year. The larger raises coincide with a surge in demand for labor and a shortage of supply of hourly workers and specific professional roles with premium skills. Given ongoing uncertainties and the growing threat of a recession, it is important for compensation and HR professionals to thoughtfully balance the demand for higher salaries to address inflationary pressures and labor market challenges against the risk of increased and permanent cost structures. In fact, the tight labor market has been an influencing factor in the decision of nearly seven in 10 companies (68%) to increase salary budgets. This includes both monetary and nonmonetary actions to attract and retain employees particularly for critical or high-performing talent. Companies are now budgeting an overall average increase of 3.4% in 2022, compared with the average 3.0% increase they had budgeted in June 2021. In the Hospitality, Travel and Oil and Gas industries, companies likely lowered their salary budgets in 2020, with many going well below 3%. After establishing increase budgets (based, of course, on market data intelligence), it is critical to align your priorities. 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. Working shoulder to shoulder with our clients, we uncover opportunities for sustainable successand provide perspective that moves you. of companies globally increased salaries. 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%). Management and professional employees receiving the highest possible performance rating were granted an average increase of 4.5% this year, 73% higher than the 2.6% increases granted to those receiving average ratings. Lori Wisper However, roughly one-third of participants have revised their 2022 projections upward and the 2022 average projected increase (as . -, UBS Adjusts Willis Towers Watson's Price Target to $248 From $235, Maintains Neutral Rating, Willis Towers Watson Public : WTW Appoints Leigh Ann Rodgers Western Region Client Strategy Leader for North America. 6.4 Days. As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. Salary ranges can vary widely depending on many important factors, including education, certifications, additional skills, the number of years you have . Belgium), your salary increases will need to follow the guidelines. Merit increases in the General Industry entering and during the last three periods of U.S. economic downturn, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). There are several findings that are worth noting from our survey of global practices. Your ability to manage risk is key to your thriving in an uncertain world. Our salary surveys provide robust, detailed salary data for all industries and countries, covering executives and employees at all levels. (EDGAR Online via COMTEX) -- ITEM 7. If How fast should pay move to effectively attract and retain talent in this market? is the question, then perhaps salary budget trend data is not the best answer. The 15 largest economies in the world are forecasting an average increase of 4.3%, which is 3 percentage points higher than the actual increase of 4.0% in 2021. Many large U.S. employers followed Amazons lead of paying hourly workers $15 per hour, even as Amazon announced that its average hourly wage would go up to $18 per hour. Companies gave employees an average pay increase of 2.8% in 2021. Then change arrived with a vengeance in 2022. According to the survey, nearly three in four respondents (74%) cited the tight labor market for increasing their budgets from prior . While its true that employees buying power is diminished when salary increases are lower than inflation, remember that pay never goes down even when inflation goes down. The other phenomenon we saw in 2021 was a sharp increase in starting salaries for many jobs, but especially for frontline, hourly workers as the $15 per hour bandwagon took hold. Salary budgets are not quite as responsive to changes in the labor market as we might think. Employers in Asia Pacific (APAC) are budgeting for an overall average salary increase of 5.08% for executives, management & professional employees, and support staff this year, according to Willis Towers Watson's latest Salary Budget Planning Survey report. What are you trying to achieve with salary increases? 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 . The group's data shows that the proportion of businesses expecting to freeze pay altogether is also . With reliable market data that supports the critical and defensible decisions you must make. . 4.9% Companies are now budgeting an overall average increase of 3.4% in 2022, compared with the average 3.0% increase they had budgeted in June 2021. Dive Brief: Amid accelerating inflation and tight competition for workers, U.S. companies plan to boost employee pay next year at a higher rate than in 2021, projecting 3% salary increases for executives, management, professional employees and support staff, and 2.8% higher payrolls for production and manual labor employees, according to a Willis Towers Watson survey. Comparing average salary increases for the top 15 largest economies, Figure 2. 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. Salary increases in 2023 are projected to outpace 2022 pay raises but to trail inflation, new research shows, as insufficient pay raises drive employee turnover. Indicators show that employers are continuing to return to a more-normal salary review process this year as compared with the freezes of 2020. Frontline hourly workers: Cant get them. Production and manual labor employees are in line to receive average increases of 2.8% next year, higher than the average 2.5% increases this year. 3.8%, 2008: 3.7%, 2009: 2.2%, 2010: 2.5%, 2011: 2.8%, 2012: 2.9%, 2013: 3%, Figure 1. Average US Pay Increase Projected . Nearly half of companies (46%) are planning or considering improving the employee experience to address inflationary pressures and drive retention. This projection is followed by 2023 projections in the United Kingdom (4.0%), Germany (3.8%), and Spain (3.6%). Organizations with operations in Russia are forecasting salary increase budgets of 7.3% in 2023, which is half a percentage point higher in 2023 compared to the 2022 average actual increase of 6.8%. Distributed by Public, unedited and unaltered, on 13 January 2022 14:20:02 UTC. Finance: 2.7% to 3.5%. Taking a big-picture view ensures your salary increase process is transparent and emphasizes the connection between salary increases and business performance. Hatti Johansson Facing ongoing change in 2021, organizations around the world were forced to continually adapt and be resilient. The extreme labor market swings in such a short time meant that salary budget planning never really caught up to the craziness of the pandemic. Click to return to the beginning of the menu or press escape to close. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. Of these actions, 65% of companies say they are in place with no end date until 2023 or later, while 23% havent put any actions in place but are planning to do so. Following its recent withdrawal from the European Union, the United Kingdom topped the group at 1.5 percentage points higher in 2022 compared to 2021, with increase budgets of 4.3% in 2022 compared to 2.8% in 2021. Average actual salary increases hit 5.0% percent in 2022 as compared to 4.0% in 2021 among organizations in the top 15 largest economies in the world. Among organizations that reported higher 2022 actual salary budgets compared to 2021, the most cited reasons for those increased budgets were: In October and November 2022, when the December SBP survey was fielded, 45% of respondents in the 15 largest economies said their salary budget increases were higher than projections just a few months earlier in July. 2000-2002, 2008 Data: Towers Watson Database on Merit Increase Budgets taking averages of WWDS, Mercer, and World at Work Surveys But increased salary budgets only make it more critical for organizations to have a clear strategy for awarding pay increases as effectively as possible, prioritizing critical employees and hot jobs, and differentiating for performance. Maintaining an on-going relationship with clients and gaining an understanding of the clients' business and industry. Among the major industry groups, high-tech and pharmaceutical companies project the largest increases (3.1%) followed by health care, media and financial services companies (3.0%). Global Innovation and Product Development Leader, Rewards Data Intelligence, 2022 Salary Budget Planning Report Global (December Edition). This trend continued for support staff and hourly workers who received the highest ratings. Share. All rights reserved. While payroll increases are real, they are not reflected in salary budgets. Click to return to the beginning of the menu or press escape to close. Photo by Chris Welch / The Verge Attracting and retaining employees remains a major challenge for employers. . Willis Towers Watson survey on salary trends published in October had projected a median increase of 9.3% in salaries in 2022, as against an increase of 8.1% in 2021. In response to a tight labor market, employers are planning to up employee salaries in the biggest projected hike in 15 years, new data from Willis Towers Watson finds. The best place to start? Again: We ask why? Sources: 1990-1994 Data: American Compensation Association Salary Budget Survey. However, considering that changes in salary budgets often lag economic trends by 6 to 12 months, it appears that we are now seeing salary budgets catch up with labor market dynamics. ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. The Great Resignation has forced employers to pay higher starting salaries for talent theyve lost, while also adjusting salaries to retain those they are trying to keep. A total of 725 UK firms took part in a global study about salary budgets and recruitment by advisory, broking, and solutions business Willis Towers Watson (WTW), which revealed that 2022's pay increase is set to be more than the 2.4% average this year. 2021-2022 saw higher pay increase budgets. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. In fact, 67% of organizations reported increasing their total compensation spend in 2022 as compared to 2021. That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. Also, remember that every organization will have its own set of goals and priorities. Access the 2023 Salary Budget Trends Report, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). Salary budgets remained steady overall at 3%, in part because of the aforementioned lag, but also because, while unemployment was high, it was only high for about three months. Thus, population trends show that there are and will continue to be fewer workers to fill needed positions. While 44% of organizations reported not changing their projections from earlier in the year, almost 1 out of 4 (23%) reported that their 2022 projections are higher now than anticipated earlier in 2021. A total of 1,220 companies representing a cross section of industries participated. For example, instead of trying to apply a single global plan, group countries based on their economic, labor market conditions, or statutory requirements (e.g., mandatory indexation, collective bargaining). It also shrank 10.6% among the historical leadership talent pool (workers ages 45-54). 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%). Like the Silent Generation that lived through the Great Depression, this generation of leaders remembers what it was like to try to survive with extremely scarce resources and strive to be prepared even when faced with unpredicted financial gains. That's a far cry from just a couple of years ago. 2022 will see salaries and other aspects of life return to some sense of normality and more companies implementing regular salary reviews and higher increases than in 2021.