Need compensation planning data in US? And a quarter of employers plan to give increases in the range of 5%-7% in 2023. Moreover, only 2.8% of Asia Pacific employers indicated they have plans or are considering to implement further layoffs and workforce reductions next year, compared to 7.8% in 2021. As the US reverses restrictions on immigration, experts say firms may find more tech talent, which could reshape their business. Likewise, employees with small children have also had a pandemic experience that is vastly different from those who have teenagers or no children. NEW YORK, September 30, 2022--Today, Mercer released the results of its 2023 US Compensation Planning Survey revealing that while salaries are going up, 2023 compensation budgets and salary . Individual performance is still the most common factor that employers use to determine the size of an individuals annual increase. The Video could not be loaded because the privacy settings are disabled. The projected increase is slightly . If you have previously participated in the 2023 SBS survey, you can return to the survey, and enter your email address to receive the link to your existing survey submission. Organizations that recognize the specific lifestyles of their employees will have a head start in attracting and retaining toptalent. Download now to learn about all these trends in compensation strategy and more as the new normal continues to evolve. Once you have clicked Submit to complete the survey, a confirmation email will be sent to you. Depending on the industry, we may continue to see budgets increase but some organizations bracing for a recession are likely providing conservative merit increases in an attempt to avoid layoffs later in the year. Excluding companies that have implemented wage freezes, it is a 1.2% improvement from 5.3% this year but still below the 6.9% in 2019. Use your compensation budget wisely. While pay transparency might be in the news more and more, employers have been slow to modify their communication of pay ranges. That challenge of attrition rates can prove to be an opportunity with the right perspective. Then, consider benchmarking how your total rewards program stacks up against your competitive set: salary, benefits and those more nuanced qualitative differentiators that speak to your organizational culture. Despite knowing this, we have continued to ask survey participants to give us their budget projections in August, largely because, well, clients and consultants alike are used to survey vendors publishing budget numbers at this time of year. Recent articles reported by our team on important business-news developments. Guleyin stated that the average wage increase expectation for 2022 for the 673 companies surveyed stood at 32%. With 11.3million job openings, employees have options. 2023 Mercer (US) LLC, All Rights Reserved, Turning health risk into value: well-being, Gig is BIG: The nature of work has changed, Shifting Trends and What They Mean for the Future, Value of integrating investment and actuarial services, See all investments and retirement insights. Organizations should take care in interpreting this forecast data as there is a significant variance in company practices regarding the types of pay increases that are included in these projections. Savy employers are starting to do the same, expanding their labour market beyond regional boundaries. Manage your transportation benefits efficiently and effectively. Mercers approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Lastly, take the opportunity to become more transparent around pay. Participate to receive a free country report for all markets where you provide data! As for the percentage of the total base salaries that are set aside for promotions, this year participants indicated that they budget 1.3%, which is slightly higher than this time last year. Will annual increase budgets be higher when we run the survey again in November? US salaries are going up, but compensation budgets for next year and salary projections are expected to lag inflation, according to the "2023 US Compensation Planning Survey" released by Mercer. The typical practice is a 1.5X difference in increase percentages between these performers (e.g, an outstanding performer receives a 4.5% increase vs. a competent performer receiving 3.0%). Employers are budgeting an average of 3.8% for merit increases compared to the 3.4% actually delivered this year and 4.2% for their total budget increase for 2023. From job search strategies to networking and interview tips, our coaches and tools are here to help. However, there is some variation by industry: In order to accommodate the increasing annual increase budgets, salary structures are increasing as well. Employers have an opportunity to share with employees not only how pay levels are set, but also information on the market range for their role. For example, the US median increases have risen from 3.0% (during the middle of 2021) to 3.5% (as of now). Give us a call at 1-855-286-5302 or email surveys@Mercer.com. Compensation practices & salary increase projections for 2022. The new type of job that ChatGPT is making companies scramble to fill. Japan, New Zealand and Australia are the lowest at 2.5%, 3.1% and 3.3% respectively. This is especially true for hourly workers, whose base pay rose on average 6.7%2 in 2022, despite a 3.8%3 total base pay increase budget. Beyond budget numbers, we have recently started looking at the per capita increase, which is simply a calculation of the change in total salaries from one point to another divided by the number of employees. The most increased focus is in the following areas: The results of this survey show that as salary increases stall, employers will need to get creative about non-cash rewards to retain and engage employees. Just as important, however, is ensuring that your organizational culture is one that actively seeks out this kind of feedback, welcomes it and, most importantly, acts on the findings. This survey explores trends with regard to long-term assignments (LTA), and how policies and practices to manage them evolved since our last 2020 edition, run during the pandemic. Most employers reported that the pay increases are in direct response to . This reality tends to advantage employees in terms of real spending during low . Participate to get your free snapshot report! Slightly higher than the pre-pandemic levels, the projected salary . Currently, employers are projecting a salary increase of 4.1% for 2023, slightly up from the 4% actual increase employees got this year. Rising wages due to the labor shortage, coinciding with periods of high inflation, have created confusion for employees. The Video could not be loaded because the privacy settings are disabled. How can they be made to feel like they belong in your organization when not sharing office space and coffeebreaks? Organizations in France, Russia, India and South Korea are all forecasting . Simply revisit the survey and click the submit button to confirm previously entered data. While in todays period of high inflation this may seem disadvantageous to workers, the reality is that over the last two decades, this approach has delivered larger compensation increases to workers than it would have if budgets were indexedtoCPI. Likewise, we are seeing an increase in the total increase budget for 2023: 4.2% for 2023, compared to 3.8% in 2022. As expected, this year, the majority of organizations are planning to provide salary increases in 2022. Bringing you the most up-to-date information on remuneration trends and insights on the current rewards environment, key economic data affecting pay decisions, topical HR issues and more. September 30, 2022 New York, United States Today, Mercer released the results of its 2023 US Compensation Planning Survey revealing that while salaries are going up, 2023 compensation budgets and salary projections for US employers are expected to lag behind inflation. "May you live in interesting times" is an English expression claimed to be a translation of a traditional Chinese curse. Salary data for a broad cross-section of jobs within 5 US geographic regions. More than 30 million viewers are expected to watch football this Thanksgiving. Participation is simple, with just one survey for all four editions. Under the 'Manage Cookies' option in the footer, accept the Functional cookies to allow the video to play. Many employers are reporting an increase in attrition rates as employees begin to look for more appealing offers, both in their current industry and in new ones altogether. Only 10% of US organizations say that recessionary concerns are having a high impact on their salary increase budgets right now. Hong Kong (3.5%), Singapore (3.5%), Malaysia (4.5%), Philippines (5%) and Thailand (5%) came in below the regional median of 5.4%, while Indonesia came in above at 6.5%. Survey participation: March 13 March 24. These are the highest budgets weve seen since the 2008 financial crisis. Of those companies that indicated COVID-19 had a high impact on their . Companies in the U.S. are planning to increase employee salaries by an average of 4.1% overall in 2023, WTW's recent Salary Budget Planning Report found. If you have participated in this survey within the past year, you will receive an email reminder during the participation period for each edition. The survey found that no employers are currently planning to freeze pay in 2023. Salary increase percentages for 2022 are higher than prior year across all industries and markets in the region, with some even above pre-pandemic levels. With all that said, what are we looking at for 2023 preliminary budget projections? Scroll down for more information on this survey. Monitor employee movement trends in, out, and within companies around the world with data on turnover, workforce changes, hot skills and more. The projected increment is higher than the pre-pandemic levels of 2019 by 50 basis points. Actual increases were higher than predicted. This is our annual Compensation Planning Outlook for 2022. Participants will receive a complimentary executive summary report of the results! 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. The projections for 2022 salary increase budgets jumped almost a full percentage point, from 3 percent in April to 3.9 in November. As a result, forecasted increases are likely understated to actual total increase practices by as much as 25-33% of the overall budget. 2 World Economic Outlook, International Monetary Fund, April 2021. The projected salary increments reflect guarded optimism as Thailand's Gross Domestic Product (GDP) is expected to grow by 3.8% in 2023, the highest in . However, with teams spread across a country or globally, employers need to overcome key challenges in fostering a sense of organizational values and processes. And with the quit rate hovering near 20-year highs of 2.9percent per month, employees are taking advantage. If your company runs on a calendar financial year, then its likely that you are putting together the numbers and justification for annual increases, structure adjustments, and other critical compensation management elements. Corporate & Investment Banking / Global Markets. As you plan your compensation strategy and total rewards program, youll want the latest data-driven insights about the labour market. Additionally, to keep it in perspective, the majority of employers did report that the percentage of employees receiving off-cycle increases is typically less than 30%. Simply revisit the survey and click the submit button to confirm previously entered data. With the potential for price hikes to be temporary, employers may alternatively consider lump sum awards to offset rising prices. As long as the economy and the job market remains strong, were likely to see continued upward pressure on wages, particularly with hourly workers and in certain industry sectors. Given the continued impact of the pandemic on business conditions, accelerating inflation, and labor supply and demand imbalances, organizations felt compelled to adjust their compensation increase budgets in the latter part of 2021 and early 2022. their associated costs. Ensure your incentive programs are competitive. Organizations should use this and other salary increase projection information directionally and engage leaders in a discussion focused on internal needs and objectives vs. over-indexing on external market data. According to Sunit Patel, Mercer's chief actuary for health and benefits, "One issue is that people have been deferring or cancelling care for the past two years and, while that lowers cost in the short term, it can increase cost over the longer term when medical conditions . For example, some companies have been considering stipends or allowances to help workers combat the rising gasprices. If you would like more details on the Mercer QuickPulse or US Compensation Planning Survey please contact us at 800-333-3070. . Despite what was projected in 2021 for 2022 salary increases, it has gone up. Recession fears dont seem to be impacting increase budgets, Employers are increasing pay outside of the annual cycle. Review statutory and supplemental benefit details for social security, retirement, medical, death, disability and more. Take a proactive approach to managing your workforce in a competitive job market. Understanding where your offer may not be competitive enough can give you insights into what employees truly want out of their workplace. Of the 55% that plan to adjust structures in 2023, we expect to see the structures increase by 2.8%, which is just above the average actual adjustment of 2.2% reported in March of 2022. But is it enough? Share. Separate promotion budgets still dont seem to be the norm only 24% indicated that they have them. In the near future, jobs are no longer going to be the organizing unit of work but skills would be. Ensure your incentive programs are competitive. But whats the difference between tolerable stress and toxic stress? The exception is Brazil, which is projecting a 6.2% salary budget increase in 2022 compared to 7.1% in 2021. Survey: Transportation Policies | Extended to March 3, Survey: Strategic mobility management | Participate by March 17, Survey: Long-term international assignment policies and practices | Participate by March 17, Survey: Salary Budget Snapshot E2 | Participate by May 5. By partnering with Korn Ferry, Keystart has begun to act transparently on employee feedback, leading to enablement and engagement throughout the business. Participate in as many of the markets listed below, as you like. By using our site, you agree that we can place cookies on your device. Mercer's researchers found that as of October 2021: Even though recovery is uneven across the region, companies are showing renewed business confidence as well as getting used to working with the pandemic and this is reflected in the rebound in salary increments.. Under the 'Manage Cookies' option in the footer, accept the Functional cookies to allow the video to play. Mercer, an American asset management firm, projected an increase of 9% in salaries across industries in 2022. Hiring across the region has also accelerated in the second half of 2021, as businesses shift their attention from reducing staff to hiring more, albeit still not at pre-pandemic levels. Other factors commonly considered include internal equity and current salary compared to midpoint or market value. Employers are increasingly using off-cycle increases to combat retention concerns, along with other issues. If you need more assistance, we have team members standing by to help. Learn about healthcare offerings that help you create an inclusive benefits program to meet the needs of all employees. Theres one thing certain about the future of work: unpredictability. The Retail industry is expecting the biggest jump to 12.6%, from 8.1% in 2021, followed closely by the . Determine the right incentive program for your company by evaluating eligibility, targets and actual incentive data for STI, sales and LTI. We use cookies to improve your experience. According to Mercer's US Compensation Planning Survey, the average 2022 merit increase budget is 3.4 percent, with total increases (including other types of base pay increases, such as promotional awards) reaching 3.8 percent. More than 72% indicated their budgets are finalized between October and January, with most selecting November or December. If you experience any issues accessing your survey, please contact us. This Video is unable to play due to Privacy Settings. View our expertise through the lens of your existing organizational culture to determine what kinds of solutions may work best for your remoteteam. From that lens, we are seeing that salaries across the board have increased 4.1%, but there are some significant differences by industry. For most employers, cost of living increases are a thing of the past. Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer is a business of Marsh McLennan (NYSE: MMC), the worlds leading professional services firm in the areas of risk, strategy and people, with 81,000 colleagues and annual revenue of over US$19 billion. Other industries such as High Tech and Consumer Goods also saw increases over prior year. This, combined with a strong job market, has heightened employee expectations for increased compensation this year; and employers are responding. When comparing the average base pay per employee from 2021 to 2022, wages increased an average of 4.9percent. 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%; Finance: 2.7% to 3.5%; Survey respondents are typically HR professionals, and their organizations cover a broad range of of size, geography, and ownership structure. Notably, when asked what they were doing to offset market inflation for their employees, only 38% indicated that they would provide an ad hoc off-cycle wage review and/or adjustment, while a similar percentages indicated that they were not planning to do anything. Need compensation planning data in Canada? In these instances, companies may take action to offset the rising cost of inflation, such as lump sum awards for employees or more frequent salary reviews. As skills begin to overshadow education or experience, more companies are implementing skills-based pay practices to attract new talent and retain critical skills. The average 2023 merit increase budget, including zeros, reported by survey participants came in at 3.4%, compared to the 3.2% actually delivered in 2022. These products are all included in Talent All Access Portal+, but can also be purchased separately. In the 1980s, most employers moved away from cost of living wage increases and instead focused on cost of labor the market rate for the job being performed. We have seen this manifest through an emerging shift in approach to compensation setting for low wage workers. Now part of the Mercer QuickPulse TM survey series to give you the latest insights in compensation planning and total rewards. More centralized review, calibration, and control processes of base salary increases, Greater differentiation in increases between outstanding and competent performers, The use of sustainability, ESG and DEI metrics in incentive plans, Connecting the work the organization does to its mission, vision, and values, Clarifying and communicating employee growth and career development opportunities, Engaging with employees in organization change priorities, Building manager and leader effectiveness to build connections and inclusivity within their teams. Will annual increase budgets be higher when we run the survey again in . You need reliable compensation planning insights to help you navigate through this unique labor market.In a series of brief surveys, you'll access key data points like annual increase budgets, structure adjustments and incentive usage that meet your immediate compensation planning needs. However, no one is planning to freeze salaries, even with looming fears of an economic downturn. Mercerbelieves in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. One in three organizations say they have, or plan to take, a living wage approach for hourly wages, according to Mercers Compensation Planning Survey. Missing your live results access code? No two workplaces will have the same answers to these questions. Given the typical budget approval process at any organization, we get it. We recommend employers consider three actions: First, while employers may not need to take broad-scale action on compensation due to inflation, action is warranted based on the conditions of the labor market. Mercers approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Theres an increased use of select cash compensation programs in the new war for talent and increased utilization of select non-financial reward programs. And the Workspan Podcast offers timely insights from experts in a . Heres our take on 3 ways organizations should face the unexpected and thrive. Regardless of the compensation increase figure you look at, none are rising near the level of inflation creating much angst foremployees. However, no one is planning to freeze salaries, even with looming fears of an economic downturn. If you need more assistance, we have team members standing by to help. Based on the average of five firms gathering compensation data ( Normandin Beaudry, Mercer, Pa yscale, LifeWorks, and Eckler ), projected increases to Canadian salaries in 2023 are expected to be approximately 3.8%. Overall salary increments projected for 2023 to average 4.8% across markets in Asia Pacific, but real salary increases are nominal. However, they dont paint the full picture of wage increases. Salary.com | Sep 2022 Salary Budget Survey 2022-23: Top-Level Results Average Salary Increase Budgets Were 4.1% in 2022 and Projected at 4.1% in 2023 WorldAtWork | Aug 2022 Companies are budgeting . This calculation gives us a look at how much average salaries are changing due to hiring rate increases and off-cycle adjustments. We were prompted to initiate this survey when it became increasingly clear from our clients toward the latter part of 2021 that early compensation increase projections for 2022 may no longer be relevant. When it comes to total rewards, DEI can mean an inclusive benefits package: forward-thinking employers, for instance, are beginning to offer fertility and surrogacy benefits to same-sex couples, and support gender affirmation surgery. Interestingly, the Technology industry typically leads the market with their compensation awards, yet the survey found that while Technology employers are right at the national average for total increase (4.2%), there is a slight lag on the national average for merit increases (3.7%) a departure from previous years. So many things in our world are changing. Executives, management and professional . Please see ourPrivacy Policyfor details. In 2020, inflation was a low 1.4% but salary increase budgets in 2020 and 2021 were higher (between 2.5% and 2.8%). Employers are budgeting an average of 3.8% for merit increases compared to the 3.4% actually delivered this year and 4.2% for their total . Listening to your employees about their concerns and acting upon them is central to creating an effective DEI strategy. While wage increases are inevitable, theres more to the solution. Slightly higher than the pre-pandemic levels, the projected salary . This Video is unable to play due to Privacy Settings. Of the 62% that plan to adjust structures in 2023, we expect to see the structures increase by 3.0%, which is just above the average actual adjustment of 2.9% reported in March of 2022. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. except for those from the High Tech industry, can also expect higher bonus payouts this year, based on Mercer's mid-2022 forecast. Just always keep in mind that you will likely see a change from the September to the November publication of the projected budget numbers. Compare your company to the market with base salary and total cash compensation data for up to 50 benchmark jobs. How will you use this information to develop your proposal, knowing its preliminary? This Video is unable to play due to Privacy Settings. Now part of the Mercer QuickPulseTM survey series to give you the latest insights in compensation planning and total rewards. That's a far cry from just a couple of years ago. Organizations should also remember that pay is only one tool in their toolkit; take a broader view of total rewards and implement benefits that help meet workers needs particularly those that are low to no cost, but of high value like flexible working, or financial wellness programs.. . Mr Swani added, Adopting skills-based pay approaches, either by replacing or complementing existing job-based models, creates a competitive edge in todays changing business environment by supporting the attraction, development and retention of critical skills. This snapshot survey is conducted four times per year and provides up-to-date salary increase budget data for 100+ markets across the globe. In March 2022, only 38% indicated that they were providing off-cycle increases, but in this pulse survey, 64% of participants report that they provide off-cycle increases. Individual performance is still the most common factor that employers use to determine the size of an individuals annual increase. Employers' compensation budgets are set to rise 3.3% for merit budgets and 3.5% for total budgets in 2022, a survey by HR consulting firm Mercer found a slight increase from the 2.8% merit and . The top three sectors with the highest salary increase projected for 2022 are technology, e-commerce, and IT-enabled services. To address talent attraction and retention issues, organizations are putting greater emphasis on flexible work and pay-for-skills approaches. According to the International Monetary Fund, Asia Pacific remains the fastest growing region in the world, but the gap in economic recoveries across the region is widening, with risks tilted to the downside due to uncertain pandemic dynamics as well as vaccine coverage and efficacy against new virus variants. Many companies took immediate action following the minimum wage announcement, according to Mercer Turkey CEO Dincer Guleyin. We are seeing markets that have kept COVID-19 under control reporting higher than average pay raises. Beyond budget numbers, we have recently started looking at the per capita increase, which is simply a calculation of the change in total salaries from one point to another divided by the number of employees. In summary, wages are going up, but inflation is not the trigger. How will you use this information to develop your proposal, knowing its preliminary?