Average salary increases across regions (excluding zeros), Global Innovation and Product Development Leader, Rewards Data Intelligence. 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 . Organizations should prioritize their actions based on the needs of both employers and employees and pay close attention to market data to inform any changes.. Please note that the data is from multinational organizations with operations in Russia; data from local Russian organizations was not collected in 2022. 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. Dont underestimate the importance of this education and communication effort. More than ever, making the most of your capital means solving a complex risk-and-return equation. Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). This translates to an average salary increase of 9.8% in 2023, compared to the actual 9.5% increase paid out in 2022. 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. Even with this lag, it would be natural to expect greater movement than the 2022 median projections of roughly the same 3% theyve been for so long, but that hasnt happened. 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. Prioritizing and segmenting increases is vital for an appropriate return on investment. The group's data shows that the proportion of businesses expecting to freeze pay altogether is also . 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%). Willis Towers Watson Survey. We have answers. More than ever, making the most of your capital means solving a complex risk-and-return equation. But, for now, it appears that the same Lets not be the first to significantly raise salary budgets mentality is at play for 2022 projections. Email author Lori Wisper and continue the conversation. Copyright 2023 WTW. . Average US Pay Increase Projected . Even the 1.0% jump we saw from 2021 to 2022 is significant in terms of organizations total spend on compensation. For now, continued higher budgets are projected in most of the worlds largest economies. If so, then your priorities would be to adjust any major diversity, equity and inclusion issues using salary budgets even some fair pay analytics and consider in-demand and business-critical talent. Tight labor markets, inflationary pressures and employee retention concerns fueled salary increases to rates not seen in nearly two decades. More than two-fifths of organizations either have adjusted or are considering adjusting salaries more aggressively; 90% of organizations making or considering salary increase adjustments are doing two adjustments per year. Canadian companies plan to give employees larger raises next year as they recover from the economic fallout from the pandemic and face mounting challenges attracting and retaining employees, according to a new survey by Willis Towers Watson (NASDAQ: WLTW), a leading global . All rights reserved. It felt like a true mystery. Click to return to the beginning of the menu or press escape to close. Organizations in France, Russia, India and South Korea are all forecasting . The Willis Towers Watson survey on salary trends stated that there will be a median increase of 9.3 per cent in salaries in 2022, as against an increase of 8.1 per cent in 2021. On the one hand, employers need to continue effectively managing fixed costs as they rebound from the pandemic. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. While payroll increases are real, they are not reflected in salary budgets. That may mean changes to how salary budgets have historically responded to economic pressures. Figure 1. As economic challenges loom large in the U.S., a fifth of organizations (21%) that are changing salary increase budgets have said they will fund increased spending by offering compensation plans and benefit programs that their employees value most. 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. 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. Employees in the following five industries are expected to see the largest salary increases in 2022 compared with their actual increases in 2021: "There's a great reprioritization of work, rewards and careers under way, and it's putting significant pressure on compensation programs for many employers," said Catherine Hartmann, North America Rewards practice leader, WTW. After determining your strategic goals, you can start narrowing down how to achieve those goals by setting priorities. Cant keep them. Your ability to manage risk is key to your thriving in an uncertain world. Long story short, prioritizing and segmenting rewards actions will be vital for an appropriate return on investment. 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%). As noted, base salary represents one of the largest fixed labor costs for employers, and salary increases have a compounding effect on fixed costs over time that must be managed intelligently. 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. ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. 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 . End of main navigation menu. It also means going beyond a one-size-fits-all approach to pay increases and calls for differentiation among countries, at-risk or critical talent, representing a multi-factor approach that goes beyond pay to optimize total rewards. However, in countries where inflation is particularly low, employees may see an increase in their real paythe UK is a good example. In late 2021, projections stood at 4.3% in the 15 largest economies, compared to 2022 average actual salary budgets of 4.9% among those granting increases in the July 2022 report. 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. End of main navigation menu. More than ever, making the most of your capital means solving a complex risk-and-return equation. UK employers increased the amount of money they put aside for staff pay rises over the second half of last year, it has emerged. Thats because employees get promoted, they get counteroffers and retention monies, and equity increases. After all, you cant respond to everything happening in the market, all at once. By 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. 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. Why? Our Bloomberg On-Site Support (BOS) teams provide 24/7 on-site technical solutions to Bloomberg's internal and external customers in more than 75 countries. However, companies in the Distribution, Health Care or Food Manufacturing businesses either kept salary budgets at 3% or perhaps even raised them. 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). Your ability to manage risk is key to your thriving in an uncertain world. The U.S. Department of Labors Employment Cost Index showed that pay rose 1.5% in the third quarter of 2021 (the latest data), up from 0.9% from the prior quarter a significant increase. Attracting and retaining employees remains a major challenge for employers. 3% of a larger total payroll is still 3%. This translates to . Remember that a one-size-fits-all approach wont work. End of main navigation menu. You will need to make it a point to help them see beyond salary increases to other actions that have an impact on the workforce. That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. Salary.com, Inc. Sep 01, 2021, 08:30 ET. Your ability to manage risk is key to your thriving in an uncertain world. 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. Form 10-K (annual report [section 13 and 15(d), not s-k item 405]) filed with the SEC We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. The best place to start? One in three employers bumped up original salary increase projections. The second-gen Sonos Beam and other Sonos speakers are on sale at Best Buy. Even with ongoing pressures, organizations must stay levelheaded and take a conservative approach that aligns with market conditions and is directed by clear business priorities. The 2021 General Industry Salary Budget Survey was conducted by Willis Towers Watson Data Services between April and June 2021. They also are looking at how to focus their salary budgets for the greatest impact, with 2022 projections showing that 96% of companies globally will increase salaries and far fewer will implement salary freezes than in 2021 or 2020. Going into 2022, workers' pay is all about supply and demandand inflation. 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. Action, reaction or no action? With reliable market data that supports the critical and defensible decisions you must make. Focused on tighter labor markets and the need to attract and retain talent, more than 80% of organizations globally held their regular salary review cycle in 2021 (compared to 63% in 2020), with budgets increased over prior years. 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. 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%. 6.4 Days. 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.". Sources: 1990-1994 Data: American Compensation Association Salary Budget Survey. January 12, 2022. COVID-19 also affected the financial health of different industries to the extremes. By focusing on health and wellness benefits, workplace flexibility, careers and DEI, organizations can position themselves as the employer of choice for their current and prospective employees.. 96% Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success-and provide perspective that moves you. 2022 salary budgets: With worker shortages, why arent they higher? From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Yet, while uncertainty was the word of the year (thankfully nudging out 2020s unprecedented), one thing was clear: Labor market pressures stemming from the pandemic had a significant impact on how organizations finalized their 2022 pay budgets. 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. The best way to understand how your organization may need to increase pay in the future is to analyze all changes to pay throughout a complete calendar year, not just the one-time event that represents the merit pay process. While countries where there is centralized union negotiations (e.g., Germany, Spain) or mandatory indexation (e.g. Remember to segment your workforce, for example by employee level (e.g., hourly, professional, executive), performance level or jobs in which youre having trouble attracting and retaining talent. Set aside salary budget projections to look at real wage growth. Years of Dividend Increase. Salary increases rarely match sudden increases in inflation, and the time horizon or duration of inflation or labor market shortages affects decisions in uncertain times. 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%. US respondents to Payscale's survey project an average exempt employee salary increase of 3.8 percent for 2023. One common theme to remember: Even with an increased budget, it is important to segment your workforce as you consider your goals. However, also consider that the rate was 3.5% in January and February 2020, and then went up slightly in March 2020 to 4.4%. More than ever, making the most of your capital means solving a complex risk-and-return equation. Gonzalo brings in-excess of 15 years of high-profile B2B global sales experience, diverse international business development, enterprise key account management, and vast HR consulting expertise, most recently selling SaaS solutions in the talent management world with Korn Ferry/Qualtrics, Great Place to Work, Culture Amp and Willis Towers Watson.<br><br>Prior to taking up his current post at . Fieldset Label. It also shrank 10.6% among the historical leadership talent pool (workers ages 45-54). We saw only moderate changes in 2021 salary budget projections when employers were planning for 2022. And a quarter of employers plan to give increases in the range of 5%-7% in 2023. Nearly half of companies (46%) are planning or considering improving the employee experience to address inflationary pressures and drive retention. HR pros plan for the highest pay increases in nearly 20 years, By We would have faced a steady decline in available workers rather than the drastic layoffs and unemployment increases that we experienced in spring 2020. Click to return to the beginning of the menu or press escape to close. Much has been written about The Great Resignation, but it appears that workers do have more leverage to demand higher pay and benefits (as well as more flexibility) than ever before. Trends that will drive 2023 rewards decisions. 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. The global pandemic affected the U.S. economy beginning in early 2020. According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. The most cited reasons for the higher projections were: Resilience tempered with cautious optimism will be the 2022 mantra for employers, with most looking to increase salaries and provide bonuses for employees particularly for critical or high-performing talent. 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. "While companies are boosting salary budgets, bigger pay raises alone won't be enough to help address their attraction and retention challenges. 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. Today, organizations are deciding how to focus their compensation spend for the greatest impact. Bonuses, which are generally tied to company and employee performance goals, averaged 16.0% of salary for management and professional employees. Also, take a Total Rewards perspective. 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 increases in 2023 are projected to outpace 2022 pay raises but to trail inflation, new research shows, as insufficient pay raises drive employee turnover. Copyright 2023 WTW. 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 question boils down to, What am I trying to achieve with these salary increases? This sounds simple; however, a clear answer is not always easy. 2023 Actuarial Insurance Consulting Graduate Programme, Life - Edinburgh - Willis Towers Watson Careers Willis Towers Watson Careers Edinburgh, United Kingdom Found in: Jooble GB - 2 hours ago WTW's Salary Budget Planning Report revealed that this projection for APAC is higher than last year . With workers shortages and low unemployment, why arent we seeing higher merit budgets for the coming year? could easily be heard in the virtual hallways across corporate America second only to the question, With inflation on the rise, shouldnt we be thinking about raising salary budgets?". Description. WTW Research Network Newsletter. Facing ongoing change in 2021, organizations around the world were forced to continually adapt and be resilient. | The report summarizes the findings of WTW's annual survey on salary movement and reviews practices as a means of helping companies with their compensation planning for 2022 and beyond. Organizations in smaller economies shared a similar fate, mostly averaging similar salary budgets in 2021 when compared to 2020. For example, in regions where inflation remains relatively low (e.g., Middle East, Asia), salary increases may remain above inflation. Address your talent issues with a disciplined salary review process. Ensure your salary increase process is transparent and emphasizes the connection between salary increases and business performance. see the December . The survey also revealed over nine in 10 companies (91%) awarded annual performance bonuses this year based on 2020 performance, significantly higher than 76% of companies that awarded them last year. How inflation influences pay practices, Limit the Use of My Sensitive Personal Information. Companies are budgeting an overall average increase of 4.1 percent for 2023 Tight labor market drives U.S. employers to boost 2023 pay raises 2022 Salary Budget Planning Report - Global (July . To address ongoing challenges, organizations are deciding how to focus their compensation spend for the greatest impact. UBS Adjusts Willis Towers Watson's Price Target to $248 From $235, Maintains Neutral Ra.. Willis Towers Watson Public : WTW Appoints Leigh Ann Rodgers Western Region Client Strateg.. Goldman Sachs Upgrades Willis Towers Watson to Buy From Neutral, Price Target is $290. The survey was conducted in October and November 2021. What are you trying to achieve with salary increases? For those industries that were losers in the pandemic, going from a 1% or 2% salary budget back to 3% is a huge increase, even though it isnt telling that story in the overall salary budget data. Baird Boosts Price Target on Willis Towers Watson to $259 From $246, Maintains Outperfo.. Willis Towers Watson Public : WTW deepens investment in North American Corporate Risk & Br.. WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY, 2022 projected increases (Oct./Nov. Clients depend on us for specialized industry expertise. Last year, like many things unique to 2021, this meant trying to understand why U.S. salary budgets looked like they werent moving much higher than the 3% theyd been for the past decade. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Copyright 2023 WTW. Working shoulder to shoulder with our clients, we uncover opportunities for sustainable successand provide perspective that moves you. of organizations around the world reported that 2022 salary budgets were higher than their 2021 compensation planning cycle. Also, remember that every organization will have its own set of goals and priorities. 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. Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. Belgium), your salary increases will need to follow the guidelines. 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 dropped significantly throughout the rest of 2020. The United States is projecting an average increase of 4.6% in 2023, which is above the 2022 average actual increase of 4.2% - the highest since 2008 - and higher than 3.1% in 2021 and 3% in 2020. 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. 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. Share this article. 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%. 3.8%, 2008: 3.7%, 2009: 2.2%, 2010: 2.5%, 2011: 2.8%, 2012: 2.9%, 2013: 3%, Figure 1. The data show the same result when analyzed from 2010 to 2019, demonstrating that this problem originated before the pandemic. Salary budget increases have remained relatively stable (arguably stagnant) in the past decade. 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. More than ever, making the most of your capital means solving a complex risk-and-return equation. There are several findings that are worth noting from our survey of global practices. 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.