In fact, the current environment makes these challenges even more difficult. All rights reserved. According to the survey, companies project average salary increases of 3.0% for executives, management and professional employees, and support staff in 2022. End of main navigation menu. Participants in the December Salary Budget Planning Survey pushed their 2022 actual increases notably higher than both actual 2021 increases and initial 2022 projections. Organizations in smaller economies shared a similar fate, mostly averaging similar salary budgets in 2021 when compared to 2020. The industries predicted to have the biggest salary increases in 2022 compared to what their increases were in 2021 are: Retail and wholesale trade: 2.8% to 3.6%. Click to return to the beginning of the menu or press escape to close. . This includes both monetary and nonmonetary actions to attract and retain employees particularly for critical or high-performing talent. 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%). Note: This data is from multinational organizations with operations in Russia; data from local Russian organizations was not collected for the July report. Zhongzhi Enterprise Group Co., Ltd. Jan 2014 - Feb 20173 years 2 months. Again: We ask why? 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. How inflation influences pay practices, Limit the Use of My Sensitive Personal Information. Among those organizations that reported higher 2022 actual salary budgets vs. 2022 projections, the most cited reasons were: Ongoing and diligent monitoring of labor markets and economics combined with continual adaptation is the modus operandi for employers in 2022. One common theme to remember: Even with an increased budget, it is important to segment your workforce as you consider your goals. US respondents to Payscale's survey project an average exempt employee salary increase of 3.8 percent for 2023. 2022 salary budgets: With worker shortages, why arent they higher? South African private-sector workers are set to receive an average pay rise of 5.5% in 2022, which is a cautious improvement over the 4.7% average increase paid this year, according to salary research from global advisory Willis Towers Watson. 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. Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). TORONTO, ON, September 28, 2021 Pay raises are making a comeback. That may mean changes to how salary budgets have historically responded to economic pressures. Distributed by Public, unedited and unaltered, on 13 January 2022 14:20:02 UTC. Case in point: WTWs 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. . However, remember: Even with an increased budget, it is important to segment your workforce as you develop your goals. Sources: 1990-1994 Data: American Compensation Association Salary Budget Survey. U.S. employers expect to pay an average 3.4% raise to their workers in 2022, according to a Willis Towers Watson survey. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. Lori Wisper 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. U.S. 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 advisory, broking and solutions company. Base salary adjustments are one piece of the employee value proposition. Ensure your salary increase process is transparent and emphasizes the connection between salary increases and business performance. Limit the Use of My Sensitive Personal Information. 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%. 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. 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. 2021), President, Chief Executive Officer & Director. 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%. 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 . A total of 1,004 U.S. employers responded. While the optimism shown by different countries comes with hints of caution, 2022 will likely be a better year for salary increases. We have answers. 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. 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.. Each of these are in line or higher for 2023 as compared to 2022 actual increases. Industrial manufacturing: 2.6% to 3.4%. Finally, remember other payments you may have made during the year retention bonuses or recognition awards. 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. 96% ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. Remember that a one-size-fits-all approach wont work. 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. 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. This feels comparatively low especially if you look back at April 2020 when unemployment spiked at 14.8%. 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. HR pros plan for the highest pay increases in nearly 20 years, By Our salary surveys provide robust, detailed salary data for all industries and countries, covering executives and employees at all levels. Dont underestimate the importance of this education and communication effort. Your ability to manage risk is key to your thriving in an uncertain world. | Your ability to manage risk is key to your thriving in an uncertain world. 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. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. After establishing your increases budget based on market data intelligence, it is critical to align your priorities. Labor market and inflationary pressure fueling higher-than-projected increases. 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. Average salary increases across regions (excluding zeros), Global Innovation and Product Development Leader, Rewards Data Intelligence. Address your talent issues with a disciplined salary review process. Actual salary increases reported in July 2022 were notably higher than both actual 2021 increases as well as initial 2022 projections. Labor markets and inflation have made 2022 another year of unexpected changes. That's the finding from a new survey by . "There's a great reprioritization of work, rewards . Also, the United Kingdom, Spain and Mexico saw increase budgets of 1.0 to 1.2 percentage points higher in 2022 compared to 2021. According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. 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. Global Innovation and Product Development Leader, Rewards Data Intelligence, 2022 Salary Budget Planning Report Global (December Edition). ARLINGTON, VA, November 17, 2022 Overall salary increases in the U.S. are forecast to rise to 4.6% in 2023, up from an actual spend of 4.2% this year, as the majority of companies react to inflationary pressures (77%) and concerns over the tighter labor market . It is critical for compensation professionals and organization leaders to understand the philosophical and economic factors that can and do influence compensation growth, then incorporate sound data to make defensible decisions that everyone may not like, but can live with. Thats almost a full percentage point higher. The survey found companies continue to reward top performers with significantly larger pay raises than average-performing employees. Trends that will drive 2023 rewards decisions. More than ever, making the most of your capital means solving a complex risk-and-return equation. 2020-2021 saw lower pay increase budgets. 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. As labor markets tighten and inflation rises in certain countries, all eyes are on salary budgets and, so far, they seem to be inching above prior years. Form 10-K (annual report [section 13 and 15(d), not s-k item 405]) filed with the SEC More than ever, making the most of your capital means solving a complex risk-and-return equation. Share this article. However, in countries where inflation is particularly low, employees may see an increase in their real paythe UK is a good example. However, companies in the Distribution, Health Care or Food Manufacturing businesses either kept salary budgets at 3% or perhaps even raised them. According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. 2021. 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%. It also shrank 10.6% among the historical leadership talent pool (workers ages 45-54). . Then change arrived with a vengeance in 2022. 2022 saw the highest salary budget increases in nearly 20 years. The 2021 headline salary increase is 1.9%, significantly lower than last year's planned increase of 2.5%, but with inflation at only 0.4%, the 2021 'real' increase is at 1.5% compared to 0.4% last year. Organizations in France, Russia, India and South Korea are all forecasting . 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. Average salary for Aon Strategy Consultant in Redruth, England: [salary]. The UK has . WILLIS TOWERS WATSON PLC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION A.. Willis Towers Watson Public : WTW launches pooled employer plan in the U.S. Given the reality of worker shortages, without the pandemic we may have seen a greater impact on salary budget planning. The survey of 1,004 U.S. companies, conducted during October and November 2021, found nearly one in three respondents (32%) increased their salary increase projections from earlier in the year. 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. That could be by employee level (e.g., hourly, professional, executive), performance level, or even by areas in which youre having trouble attracting and retaining talent (e.g., digital talent, engineers). 2009-Project 2011 Data: World at Work Surveys Only. 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. What does inflation mean for the insurance market? Limit the Use of My Sensitive Personal Information. All rights reserved. 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. WTWs December 2022 Salary Budget Planning (SBP) Report, Bombarded by questions about pay and inflation? Limit the Use of My Sensitive Personal Information. Base salary adjustments are one piece of the employee value proposition. Winning the talent race will require employers to continue to be creative and comprehensive with their Total Rewards strategy, said Lesli Jennings, senior director, Work & Rewards, WTW. Clients depend on us for specialized industry expertise. Most (if any) of these are not factored into a merit budget or the data reported for salary budget projections. Only 3% of employers freezing salaries. Prioritizing and segmenting increases is vital to ensure an appropriate return on investment. Click to return to the beginning of the menu or press escape to close. of respondents in the Willis . WTW's latest Salary Budget Planning Report, based on a survey conducted between April and June 2021, found . In North America, 100% of countries are expected to see an overall increase in salaries in 2022, but in the Middle East & Africa, that isn't the case. Finance: 2.7% to 3.5%. After determining your strategic goals, you can start narrowing down how to achieve those goals by setting priorities. Even the 1.0% jump we saw from 2021 to 2022 is significant in terms of organizations total spend on compensation. 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. Within some industries, base . However, bowing to public pressure and succumbing to gut instinct wont serve anyone in the long term. Copyright 2023 WTW. 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. 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. 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. Whether you can expect to receive a raise or not in 2022 depends on your location in the world, according to recent forecasts by Willis Towers Watson. 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). This projection is followed by 2023 projections in the United Kingdom (4.0%), Germany (3.8%), and Spain (3.6%). Looking across the Eurozone, where inflation exceeded 10.6% on average in October 2022, it is a reminder that each country should be viewed individually, as there are notable differences in year-on-year increases. 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. More than ever, making the most of your capital means solving a complex risk-and-return equation. January 3, 2023. The survey also found employers are continuing to recognize their high performers with significantly larger raises. The extreme differences experienced by industries drove a true mashup of salary budget results. 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. 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. This sounds like a simple question, but a clear answer isnt always easy.