Average salary increases across regions (excluding zeros), Global Innovation and Product Development Leader, Rewards Data Intelligence. The second-gen Sonos Beam and other Sonos speakers are on sale at Best Buy. WTWs December 2022 Salary Budget Planning (SBP) Report, Bombarded by questions about pay and inflation? Results from WTWs July global salary budget survey, By 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 report provides data on actual salary budget increase percentages for the past and current years, along with projected increases for next year. Lead Associate. 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. Your ability to manage risk is key to your thriving in an uncertain world. As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. The average raise is expected to be 3% next year, up from 2.7% in 2021, according to a survey by Willis Towers Watson, a human resources consulting company. Click to return to the beginning of the menu or press escape to close. Reliable market data that supports these critical decisions. On the one hand, employers need to continue effectively managing fixed costs as they rebound from the pandemic. (EDGAR Online via COMTEX) -- ITEM 7. Some had record earnings and paid out significantly above-target bonuses but, in many cases, targeted at or below the typical 3% salary increase level that also was reported as the going rate in 2020. 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. 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. 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. Copyright 2023 WTW. More than ever, making the most of your capital means solving a complex risk-and-return equation. That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. As inflation continues to rise and the threat of an economic downturn looms, companies are using a range of measures to support their staff during this time, said Hatti Johansson, research director, Reward Data Intelligence, WTW. 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. Facing ongoing change in 2021, organizations around the world were forced to continually adapt and be resilient. Or they can utilize all of these options, especially with millions of Americans quitting their jobs, changing careers or postponing looking for employment.. The exception is Brazil, which is projecting a 6.2% salary budget increase in 2022 compared to 7.1% in 2021. Attracting and retaining employees remains a major challenge for employers. Copyright 2023 WTW. 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 . In 2023, compensation and HR professionals will need to continually monitor labor markets and economic conditions and be flexible enough to act quickly when needed. 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. End of main navigation menu. 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%). From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Willis Towers Watson employees with the job title Insurance Broker make the most with an average annual salary . Salary increases in Europe and North America have stayed in the 2.7% to 3.0% range since 2010, leaving employers and employees alike to wonder when something would change. 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?". It will be interesting to observe whether these nations are, in fact, able to maintain these levels. 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. The UK has . Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). 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. Prioritizing and segmenting increases is vital for an appropriate return on investment. 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%. 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. Also, make sure you take a Total Rewards perspective. These are followed by Germany, Spain, United Kingdom, China, Canada and Mexico, which have a projection of 4 percentage points higher in 2022 compared to 2021. Then it completely skyrocketed when COVID-19 hit. After determining your strategic goals, you can start narrowing down how to achieve those goals by setting priorities. Organizations in France, Russia, India and South Korea are all forecasting salary increase budgets that are more than half a percentage point higher in 2022 compared to the prior year. We saw only moderate changes in 2021 salary budget projections when employers were planning for 2022. While current pay budgets have risen to 4.2%, in 2022 more than two-thirds of companies (70%) spent more than they originally planned on pay adjustments for the past 12 months. 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. Global Innovation and Product Development Leader, Rewards Data Intelligence, 2022 Salary Budget Planning Report Global (December Edition). Share this article. How inflation influences pay practices, Limit the Use of My Sensitive Personal Information. December 13, 2022 As part of a specialist Defined Contribution (DC) team which advises . 2021-2022 saw higher pay increase budgets. Maintaining an on-going relationship with clients and gaining an understanding of the clients' business and industry. Our salary surveys provide robust, detailed salary data for all industries and countries, covering executives and employees at all levels. In fact, most markets pushed their original forecasts to budgets that are higher than have been seen in nearly 20 years. At an average of 5.3% increase for PMETs and support staff, the Asia Pacific region, especially the emerging markets, is looking at noticeably higher pay in 2022. While companies are boosting salary budgets, bigger pay raises alone wont be enough to help address their attraction and retention challenges. Have feedback on this article? The extreme differences experienced by industries drove a true mashup of salary budget results. At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Figure 1. 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. Click to return to the beginning of the menu or press escape to close. That's the finding from a new survey by . Or perhaps you need a more targeted approach to retain specific employee groups by offering retention bonuses or spot award or adjusting salary ranges more aggressively. When asked why, responses spoke to the likelihood of sustaining the gains earned in 2020 and that conservatively managing fixed costs protects companies from having to take more drastic measures if high financial gains reversed in 2021 or beyond. 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. According to the survey, companies project average salary increases of 3.0% for executives, management and professional employees, and support staff in 2022. 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. 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. End of main navigation menu. 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. There are growing concerns that a recession is unavoidable. This makes it important for employers to highlight and communicate the full arsenal of rewards. Description. 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. 3.8%, 2008: 3.7%, 2009: 2.2%, 2010: 2.5%, 2011: 2.8%, 2012: 2.9%, 2013: 3%, Figure 1. 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). Set aside salary budget projections to look at real wage growth. 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 the 1.0% jump we saw from 2021 to 2022 is significant in terms of organizations total spend on compensation. Years of Dividend Increase. 2022 salary budgets: With worker shortages, why arent they higher? The survey also found employers are continuing to recognize their high performers with significantly larger raises. 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. Its easy to forget that several factors drive salary increase budgets and, as such, those factors should be viewed as one piece of a much larger pie. Tight labor markets, inflationary pressures and employee retention concerns fueled salary increases to rates not seen in nearly two decades. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Through the pandemic, we saw this conservatism in several organizations in the winning industries. The Salary Budget Planning Report is compiled by WTW's Data Services practice. Percentage of companies freezing salaries, Figure 3. 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. In 2020, we saw financial outcomes of extremes that resulted in some industries having significant financial gains and others huge losses. In 2020 when the pandemic began, Fusco adds, just . The Salary Budget Planning Report is compiled by WTWs Reward Data Intelligence practice. 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. Limit the Use of My Sensitive Personal Information. A total of 1,220 companies representing a cross section of industries participated. This translates to an average salary increase of 9.8% in 2023, compared to the actual 9.5% increase paid out in 2022. Then, start narrowing how to achieve those goals by setting priorities. Hatti Johansson 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. Hatti Johansson 0 yrs. The 2021 General Industry Salary Budget Survey was conducted by Willis Towers Watson Data Services between April and June 2021. Organizations in smaller economies shared a similar fate, mostly averaging similar salary budgets in 2021 when compared to 2020. 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. 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. In fact, the current environment makes these challenges even more difficult. 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. 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. As noted, all 15 of the largest global economies experienced higher salary budget increases in 2022 than both 2021 actual and 2022 projected numbers. Not only did 96% of organizations increase salaries in 2022 (vs. 63% in 2020), overall salary increase budgets and total compensation spend also rose to new levels, according to data in WTWs December 2022 Salary Budget Planning (SBP) Report. ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. Editor's note: At the time of publication, WTW has reported that salary budgets in the U.S. are showing median salary budget 2021 actuals and 2022 projections of 3% (with more than 1,000 companies reporting). Salary.com, Inc. Sep 01, 2021, 08:30 ET. Share. A quarterly newsletter containing insights and resources related to construction risk in the United Kingdom. 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. 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. The average actual salary increase hit 4.9% in 2022, as compared to a 4.0% actual increase amount in 2021, among those . A total of 1,004 U.S. employers responded. High unemployment started to ease in the summer of 2020 and was back below 7% by the end of the year. 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.. "2023 promises to be another banner year for employees seeking salary increases," says Chris Fusco, senior vice president of compensation at Salary.com. of companies globally increased salaries. 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. 2021), President, Chief Executive Officer & Director. All rights reserved. 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 . 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. Bonuses, which are generally tied to company and employee performance goals, averaged 16.0% of salary for management and professional employees. While it is common for the final increases for the year and projections for the following year to change over time as organizations learn more about the factors affecting increases (e.g., unemployment, supply and demand of labor), the change typically is not this dramatic. Step 3: Confirm contact preferences*. 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. This translates to an average salary increase of 9.8% in 2023, compared to the actual 9.5% increase paid out in 2022. 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. 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 . For example, you may want to retain critical roles and resolve inequity issues. The group's data shows that the proportion of businesses expecting to freeze pay altogether is also . Click to return to the beginning of the menu or press escape to close. The highest increases forecasted are in India (10.0%), Russia (8.6%), Brazil (7.5%), Mexico (6.4%) and China (6.0%). 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. 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). In the Hospitality, Travel and Oil and Gas industries, companies likely lowered their salary budgets in 2020, with many going well below 3%. However, we have not seen a labor market like this one in quite some time if ever. "As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. After establishing increase budgets (based, of course, on market data intelligence), it is critical to align your priorities. 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. January 28, 2022. According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. 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. Our unique perspective allows us to see the critical intersections between talent, assets and ideas the dynamic formula that drives business performance. White Plains, New York. Finance: 2.7% to 3.5%. 2022 saw the highest salary budget increases in nearly 20 years. Hatti Johansson . But these actions dont happen simultaneously. 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. Looking at 2022, greater scrutiny on the labor market will continue among both employers and employees. However, in countries where inflation is particularly low, employees may see an increase in their real paythe UK is a good example. Industrial manufacturing: 2.6% to 3.4%. It seems that once we hit a new floor on salary budgets, it tends to stick for a while and slowly inch its way back up, only to be slammed down again by the next economic downturn. While it is true that salary budgets reflect the supply and demand of labor, which also is measured by the unemployment rate, there is a lag in the timing of that reflection. Increased budgets are evident across most of the worlds largest economies. 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. More than ever, making the most of your capital means solving a complex risk-and-return equation. 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. 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. 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.". End of main navigation menu. COVID-19 also affected the financial health of different industries to the extremes. 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. Copyright 2023 WTW. Results from our latest Salary Budget Planning Survey suggest that 96% of companies globally will increase salaries. 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. At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Copyright 2023 WTW. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. And projections from the report show that compensation and HR professionals are expecting even higher increases in 2023. Approximately 18,000 sets of responses were received from companies across 130 countries worldwide. All rights reserved. Click to return to the beginning of the menu or press escape to close. And in the 15 largest economies, that 2023 projection is 1.5 percentage points higher than the 4.0% actual increase in 2021 and the 5.0% average actual increase granted in 2022.