Also, take a Total Rewards perspective. By Zoe Wickens 14th January 2022 9:04 am. The survey found companies continue to reward top performers with significantly larger pay raises than average-performing employees. 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. Determine strategic goals that align with both your compensation philosophy and your organizations business strategy. "As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. see the December . 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.. At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. The survey also found employers are continuing to recognize their high performers with significantly larger raises. The exception is Brazil, which is projecting a 6.2% salary budget increase in 2022 compared to 7.1% in 2021. 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 (68%). Manage the day-to-day delivery of insurance management services to our clients and be a primary or secondary point of contact within Willis Towers Watson. Modern Slavery Act Transparency Statements, Data Processing Protocol - Investment Consulting UK, Transactional and Advisory Services Privacy Notice, COVID-19 FCA Business Interruption Test Case, Concerns related to cost management, such as inflation or rising cost of supplies (48%), Anticipated stronger financial results, actual or forecasted (43%). Then change arrived with a vengeance in 2022. Prioritizing and segmenting increases is vital to ensure an appropriate return on investment. 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. A total of 1,004 U.S. employers responded. And a quarter of employers plan to give increases in the range of 5%-7% in 2023. Most organizations globally are reporting an uptick in their median total salary increase budgets for 2022 vs what they had planned in 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%. As noted, all 15 of the largest global economies experienced higher salary budget increases in 2022 than both 2021 actual and 2022 projected numbers. Your ability to manage risk is key to your thriving in an uncertain world. How inflation influences pay practices, Limit the Use of My Sensitive Personal Information. Limit the Use of My Sensitive Personal Information. 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. Please note that the data is from multinational organizations with operations in Russia; data from local Russian organizations was not collected in 2022. The Great Resignation has forced employers to pay higher starting salaries for talent theyve lost, while also adjusting salaries to retain those they are trying to keep. Thats almost a full percentage point higher. Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). Have feedback on this article? Given the reality of worker shortages, without the pandemic we may have seen a greater impact on salary budget planning. More than ever, making the most of your capital means solving a complex risk-and-return equation. It is important to take a total rewards perspective. Had the pandemic never happened, we likely would still be facing labor shortages. Even the 1.0% jump we saw from 2021 to 2022 is significant in terms of organizations total spend on compensation. Updated 12:01 PM EDT, Fri July 15, 2022 . End of main navigation menu. Nearly half of companies (46%) are planning or considering improving the employee experience to address inflationary pressures and drive retention. Average salary increases across regions (excluding zeros), Global Innovation and Product Development Leader, Rewards Data Intelligence. Comparing average salary increases for the top 15 largest economies, Figure 2. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. Form 10-K (annual report [section 13 and 15(d), not s-k item 405]) filed with the SEC But these actions dont happen simultaneously. Approximately 18,000 sets of responses were received from companies across 130 countries worldwide. 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. That is, as the unemployment rate drops, logic would suggest that pay (and salary budgets) should go up. 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). Set aside salary budget projections to look at real wage growth. 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. 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. Yet, salary increases still will need to be allocated in line with market conditions and influenced by clear business priorities. The 25% of organizations that update their salaries between June and December will be able to leverage the markets to determine their actions. Finance: 2.7% to 3.5%. Case in point: WTW's 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. While the overall A&E marketplace is relatively stable, most A&E professional liability carriers have reported an increase in severity of claims. 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 . Step 3: Confirm contact preferences*. 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 . Click to return to the beginning of the menu or press escape to close. 2022 saw the highest salary budget increases in nearly 20 years. 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. 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. Copyright 2023 WTW. Frontline hourly workers: Cant get them. With attraction and retention issues persisting, employers should consider the overall employee experience and not just salary increases, said Lesli Jennings, North America leader, Work Rewards and Careers, WTW. Salary ranges can vary widely depending on many important factors, including education, certifications, additional skills, the number of years you have . Your ability to manage risk is key to your thriving in an uncertain world. This is noteworthy, as it is above 2020s increase of 3.8%. Clients depend on us for specialized industry expertise. Among organizations that are planning to grant increases, average salary increases of 4.3% are forecasted (vs. 4.0% actual increases in 2021) for the top 15 economies in the world. 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. 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. 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. Working shoulder to shoulder with our clients, we uncover opportunities for sustainable successand provide perspective that moves you. 2021), President, Chief Executive Officer & Director. 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. 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. Based on 19 salaries posted anonymously by Aon Strategy Consultant employees in Redruth, England. Average increase of salary budgets in 2023 forecasted by the 15 largest economies. Salary budget increases have remained relatively stable (arguably stagnant) in the past decade. "2023 promises to be another banner year for employees seeking salary increases," says Chris Fusco, senior vice president of compensation at Salary.com. Jan 2022 - Present 1 year 3 months. 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. Understanding pay growth comes from studying year-over-year outcomes for different groups as well as for the entire organization. All rights reserved. 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. "There's a great reprioritization of work, rewards . Editors 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). Click to return to the beginning of the menu or press escape to close. Clients depend on us for specialized industry expertise. Salaries at Willis Towers Watson range from an average of $49,528 to $127,613 a year. Copyright 2023 Surperformance. Address your talent issues with a disciplined salary review process. December 13, 2022 As part of a specialist Defined Contribution (DC) team which advises . Also Read For example, the US median increases have risen from 3.0% (during the middle of 2021) to 3.5% (as of now). 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. Fieldset Label. 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. 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. 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. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. US employers say they expect to increase pay by 4.1% on average for 2023, which would be the highest level in 15 years. 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.". All rights reserved. Maintaining an on-going relationship with clients and gaining an understanding of the clients' business and industry. While the optimism shown by different countries comes with hints of caution, 2022 will likely be a better year for salary increases. 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. Read more at The Business Times. 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. 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. As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. In fact, the current environment makes these challenges even more difficult. Long story short, prioritizing and segmenting rewards actions will be vital for an appropriate return on investment. 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. 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. 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). 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. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Download our salary budget planning guide. -, UBS Adjusts Willis Towers Watson's Price Target to $248 From $235, Maintains Neutral Rating, Willis Towers Watson Public : WTW Appoints Leigh Ann Rodgers Western Region Client Strategy Leader for North America. Within some industries, base . Most (if any) of these are not factored into a merit budget or the data reported for salary budget projections. 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. That may mean changes to how salary budgets have historically responded to economic pressures. 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. News provided by. Working shoulder to shoulder with our clients, we uncover opportunities for sustainable successand provide perspective that moves you. Life and health insurance: 2.7% to 3.5%. More than ever, making the most of your capital means solving a complex risk-and-return equation. Thats according to the latest Salary Budget Planning Report by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company. 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. 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. Finally, consider other payments you may have made during the year, like retention bonuses or recognition awards. Base salary adjustments are one piece of the employee value proposition. Then it completely skyrocketed when COVID-19 hit. Finally, remember other payments you may have made during the year retention bonuses or recognition awards. Bonuses, which are generally tied to company and employee performance goals, averaged 16.0% of salary for management and professional employees. The United States is projecting an average increase of 3.4% compared to 3.1% in 2021 and 3% in 2020, which is the highest since 2008. 6.4 Days. 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. January 28, 2022. of respondents in the Willis . Willis Towers Watson Public Limited Company, Delayed Nasdaq 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. Explore these additional resources to expand your approach to salary planning in 2023. 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. Copyright 2023 WTW. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. 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. Industrial manufacturing: 2.6% to 3.4%. . 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. Looking at 2022, greater scrutiny on the labor market will continue among both employers and employees. Salary.com, Inc. Sep 01, 2021, 08:30 ET. 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. That's the finding from a new survey by . 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. 2022-2023 is shaping up to be . Willis Towers Watson. The Salary Budget Planning Report is compiled by WTWs Reward Data Intelligence practice. 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.