U.S. salary increase budgets are projected to reach 3.2% in 2019. This represents a slight increase from the 3.1% average recorded in 2018.
“We aren’t seeing extreme increases in salary budgets like some experts had anticipated, but we are seeing growth,” said Alison Avalos, Director, Membership & TR Strategy at WorldatWork. “Organizations know they need to offer competitive pay to attract and retain top talent but pay isn’t the differentiator that it once was. Staying competitive with pay increases will likely continue, but we don’t anticipate dramatic increases despite the tight labor market and changes to the tax code.”
Results from this survey show that fewer than 5% of organizations plan to pass tax savings on to employees via salary increases.
“Instead of investing primarily in significant pay increases, organizations continue to think more holistically about total rewards offerings and the overall employee experience,” Avalos said. “There are robust rewards programs that zero in on uniquely relevant needs for organizations. We anticipate the combination of competitive pay coupled with tailored rewards, including advancement opportunities, to be where organizations invest their resources.”
Released today, the “WorldatWork 2018-2019 Salary Budget Survey” captures data from 19 countries and covers base salary increases, merit budgets, salary structure adjustments (U.S. only), promotional increases (U.S. only) and variable pay plans (U.S. only).
More employees are being promoted, 8.6% in 2017 compared to 7.9% in 2016 and the raises associated with those promotions are higher. The size of the average promotional pay increase rose to 8.7%, up 0.3 percentage points. While budgeting and funding practices vary for promotions, the increased promotional activity may indicate that employers are responding to greater worker desires for career progression and the need to backfill Baby Boomer retirements.
Portion of Workforce Receiving Increases
Participating organizations reported plans to award at least some base salary increase (e.g., general increase/cost-of-living adjustment [COLA], merit increase) to 89% of employees in 2018 on average. The median figures show that most organizations will award pay increases to nearly all employees.
Organizational Size Data
Salary budget increases continue to be larger for smaller organizations, consistent with previous years’ data. This occurrence is more pronounced when size is based on the number of employees rather than revenue. The range of average increase budgets based on number of employees is 2.9% to 3.4%, and 2.9% to 3.3% for revenue.
The percentage of organizations using variable pay remained steady at 85% in 2018. A combination of awards based on both organization/unit success and individual performance continues to be the most prevalent type of variable pay program. More than 80% of employees earned variable pay in 2017.
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