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). Click to return to the beginning of the menu or press escape to close. All rights reserved. WTWs July 2022 Salary Budget Planning Survey, Bombarded by questions about pay and inflation? Then it completely skyrocketed when COVID-19 hit. Why? 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. The best place to start? Willis Towers Watson. But increased salary budgets only make it more critical for organizations to have a clear strategy for awarding pay increases as effectively as possible, prioritize critical employees and hot jobs, and differentiate for performance. Salary budget increases have remained relatively stable (arguably stagnant) in the past decade. Base salary adjustments are one piece of the employee value proposition. While salary budget projections may still be the best way to understand how others are setting salary budgets for the coming year, are they really the best barometer to reflect pay outcomes in times of extreme labor market changes? Maintaining an on-going relationship with clients and gaining an understanding of the clients' business and industry. 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. The group's data shows that the proportion of businesses expecting to freeze pay altogether is also . From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Within some industries, base . December 13, 2022 As part of a specialist Defined Contribution (DC) team which advises . 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). The best place to start? 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). Nearly half of companies (46%) are planning or considering improving the employee experience to address inflationary pressures and drive retention. That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. 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. The report provides data on actual salary budget increase percentages for the past and current years, along with projected increases for next year. Average increase of salary budgets in 2023 forecasted by the 15 largest economies. Your ability to manage risk is key to your thriving in an uncertain world. We have answers. 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. 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. 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. Click to return to the beginning of the menu or press escape to close. UK employers increased the amount of money they put aside for staff pay rises over the second half of last year, it has emerged. In the Hospitality, Travel and Oil and Gas industries, companies likely lowered their salary budgets in 2020, with many going well below 3%. 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. Of the organizations that reported higher 2022 projections at the end of the year, the average total increase was about 3.7% (compared to 2.9% for 2021 for the same group of companies). 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. 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%). Its also easy to see that there arent many who would buck the trend of remaining as close to overall salary budget projection levels as possible. 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. 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. Salary.com, Inc. Sep 01, 2021, 08:30 ET. Base salary adjustments are one piece of the employee value proposition. A quarterly newsletter containing insights and resources related to construction risk in the United Kingdom. Contact for Underwriting and Claims queries/information for . . All rights reserved. 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. The average actual salary increase hit 4.9% in 2022, as compared to a 4.0% actual increase amount in 2021, among those . 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. All rights reserved. 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. 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. 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. More than ever, making the most of your capital means solving a complex risk-and-return equation. Compensation Strategy & Design|Total Rewards, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). Willis Towers Watson employees with the job title Insurance Broker make the most with an average annual salary . That's a far cry from just a couple of years ago. Its easy to forget that salary increase budgets are driven by several factors and, as such, should be viewed as one piece of a much larger pie. After establishing increase budgets (based, of course, on market data intelligence), it is critical to align your priorities. 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. According to WTWs John Bremen, despite overall population growth (11.9%) and labor force growth (4.5%), the labor force shrank 3.4% from 2010 to 2020 among the historical entry-level talent pool (workers ages 16 to 24). 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. "As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. Click to return to the beginning of the menu or press escape to close. In fact, the current environment makes these challenges even more difficult. However, in countries where inflation is particularly low, employees may see an increase in their real paythe UK is a good example. Copyright 2023 Surperformance. 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. Copyright 2023 WTW. 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%). 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. Average US Pay Increase Projected . 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. Finally, remember other payments you may have made during the year retention bonuses or recognition awards. Organizations in smaller economies shared a similar fate, mostly averaging similar salary budgets in 2021 when compared to 2020. ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. End of main navigation menu. Ensure your salary increase process is transparent and emphasizes the connection between salary increases and business performance. Clients depend on us for specialized industry expertise. 2021), President, Chief Executive Officer & Director. US respondents to Payscale's survey project an average exempt employee salary increase of 3.8 percent for 2023. 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. Companies gave employees an average pay increase of 2.8% in 2021. 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%. However, the duration and scale are unknown. Even the 1.0% jump we saw from 2021 to 2022 is significant in terms of organizations total spend on compensation. Again: We ask why? 2020-2021 saw lower pay increase budgets. Thus, population trends show that there are and will continue to be fewer workers to fill needed positions. It will be harder to predict what the future holds for the remaining 75% of organizations that will update salaries between January and April. 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. Each of these are in line or higher for 2023 as compared to 2022 actual increases. Salaries in the Asia Pacific are likely to rise next year, according to the latest figures from Willis Towers Watson, and the increase will be the highest among regions globally. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. Avg Price Recovery. There are growing concerns that a recession is unavoidable. Bonuses for support staff and production and manual labor employees averaged 8.0% and 5.5%, respectively. 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. Your ability to manage risk is key to your thriving in an uncertain world. WTW's Salary Budget Planning Report revealed that this projection for APAC is higher than last year . Labor market and inflationary pressure fueling higher-than-projected increases. 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. Results from our salary budget planning survey, By Share. Companies gave employees an average pay increase of 2.8% in 2021. Indicators show that employers are continuing to return to a more-normal salary review process this year as compared with the freezes of 2020. Approximately 18,000 sets of responses were received from companies across 130 countries worldwide. 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. However, roughly one-third of participants have revised their 2022 projections upward and the 2022 average projected increase (as . 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%). Click to return to the beginning of the menu or press escape to close. Description. "There's a great reprioritization of work, rewards . Labor market and inflationary pressure fueling higher-than-projected increases. This projection is followed by 2023 projections in the United Kingdom (4.0%), Germany (3.8%), and Spain (3.6%). Hatti Johansson The extreme differences experienced by industries drove a true mashup of salary budget results. 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. 56% Oil and gas industry companies, as well as leisure and hospitality industry companies, are budgeting significantly lower salary increases for employees (2.4%). Zhongzhi Enterprise Group Co., Ltd. Jan 2014 - Feb 20173 years 2 months. Bonuses, which are generally tied to company and employee performance goals, averaged 16.0% of salary for management and professional employees. Please note that the data is from multinational organizations with operations in Russia; data from local Russian organizations was not collected in 2022. At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Step 3: Confirm contact preferences*. 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. Comparing average salary increases for the top 15 largest economies, Figure 2. In countries that are experiencing historically high inflation (e.g., U.S., UK), in addition to higher salary budgets that may still lag inflation, organizations may need more creative solutions, such as targeting by talent segment or offering one-time cost-of-living adjustments. 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. Percentage of companies freezing salaries, Figure 3. However, rising inflation in Argentina and Venezuela made these countries the exceptions to the rule, with increases of 7.3 and 279.9 percentage points higher in 2021 vs. 2020. In the end, if employees raise real-time data they find online to show they are getting a pay cut because your salary increases dont match inflation, you have some work to do to educate them about basic economics and labor markets. 2021 salary increases were notably softer than initially expected, with most markets dialing down their original forecasts to be more in line or slightly below 2020 salary budgets. 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. Labor markets and inflation have made 2022 another year of unexpected changes. Yet, salary increases still will need to be allocated in line with market conditions and influenced by clear business priorities. The survey also found employers are continuing to recognize their high performers with significantly larger raises. However, companies in the Distribution, Health Care or Food Manufacturing businesses either kept salary budgets at 3% or perhaps even raised them. A total of 1,220 companies representing a cross section of industries participated. 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. Average salary for Aon Senior Client Advisor in Redruth, England: [salary]. In addition, two-thirds of respondents (67%) have provided more workplace flexibility, while 61% have already put broader emphasis on diversity, equity and inclusion (DEI). Most organizations in the 15 largest economies experienced a dip in 2021 compared to their 2020 actual budgets, increasing their salary budgets by an average of 4.0% among those granting increases. 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.
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