Yet, while uncertainty was the word of the year (thankfully nudging out 2020s unprecedented), one thing was clear: Labor market pressures stemming from the pandemic had a significant impact on how organizations finalized their 2022 pay budgets. 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. Sources: 1990-1994 Data: American Compensation Association Salary Budget Survey. We have answers, Limit the Use of My Sensitive Personal Information, Concerns related to cost management, such as inflation or rising cost of supplies (57%). Today, a discussion on salary budget projections in the U.S. cannot exclude the notion of how or, more importantly, whether inflation should be factored into salary increase budgets. 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. Also, the United Kingdom, Spain and Mexico saw increase budgets of 1.0 to 1.2 percentage points higher in 2022 compared to 2021. Labor market and inflationary pressure fueling higher-than-projected increases. End of main navigation menu. Of the 15 largest economies, 10 countries had increases in 2021 that were in line or just (on average 0.1 percentage points) below those in 2020. Have feedback on this article? "While companies are boosting salary budgets, bigger pay raises alone won't be enough to help address their attraction and retention challenges. 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. Notably, raises are returning to pre-pandemic levels. 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. 2021), President, Chief Executive Officer & Director. 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. 3.8%, 2008: 3.7%, 2009: 2.2%, 2010: 2.5%, 2011: 2.8%, 2012: 2.9%, 2013: 3%, Figure 1. 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. This feels comparatively low especially if you look back at April 2020 when unemployment spiked at 14.8%. By Kathryn Mayer. Dont risk underinsurance protect yourself against inflation now, Global Semiconductor Industry Survey Report, Top 5 employee compensation trends for 2021, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX), Preparing for the EU Shareholders Rights Directive. Salaries at Willis Towers Watson range from an average of $49,528 to $127,613 a year. According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. 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. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. More than ever, making the most of your capital means solving a complex risk-and-return equation. WTW's latest Salary Budget Planning Report, based on a survey conducted between April and June 2021, found . Note: This data is from multinational organizations with operations in Russia; data from local Russian organizations was not collected for the July report. 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. Your ability to manage risk is key to your thriving in an uncertain world. 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 . 96% Global Innovation and Product Development Leader, Rewards Data Intelligence, 2022 Salary Budget Planning Report Global (December Edition). 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 2023 and beyond. But these actions dont happen simultaneously. The Salary Budget Planning Report is compiled by WTW's Data Services practice. The global pandemic affected the U.S. economy beginning in early 2020. 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. 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. 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. 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. After establishing your increases budget based on market data intelligence, it is critical to align your priorities. Looking at 2022, greater scrutiny on the labor market will continue among both employers and employees. Lori Wisper 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. Attracting and retaining employees remains a major challenge for employers. Access the 2023 Salary Budget Trends Report, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). Jan 2022 - Present 1 year 3 months. Results from our salary budget planning survey, By This includes both monetary and nonmonetary actions to attract and retain employees particularly for critical or high-performing talent. 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. Had the pandemic never happened, we likely would still be facing labor shortages. Bonuses for support staff and production and manual labor employees averaged 8.0% and 5.5%, respectively. A quarterly newsletter containing insights and resources related to construction risk in the United Kingdom. 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%). Clients depend on us for specialized industry expertise. 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. Beijing, China. There are several findings that are worth noting from our survey of global practices. 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. The larger raises coincide with a surge in demand for labor and a shortage of supply of hourly workers and specific professional roles with premium skills. Within some industries, base . From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. In 2020, we saw financial outcomes of extremes that resulted in some industries having significant financial gains and others huge losses. 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. Thus, population trends show that there are and will continue to be fewer workers to fill needed positions. Limit the Use of My Sensitive Personal Information. Organizations in France, Russia, India and South Korea are all forecasting . It will be interesting to observe whether these nations are, in fact, able to maintain these levels. Click to return to the beginning of the menu or press escape to close. December 13, 2022 As part of a specialist Defined Contribution (DC) team which advises . 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. 2000-2002, 2008 Data: Towers Watson Database on Merit Increase Budgets taking averages of WWDS, Mercer, and World at Work Surveys Salary increases in 2023 are projected to outpace 2022 pay raises but to trail inflation, new research shows, as insufficient pay raises drive employee turnover. Percentage of companies freezing salaries, Figure 3. Thats according to the latest Salary Budget Planning Report by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company. In another sign of a tight labor market, U.S. companies plan to give workers their largest pay bump in 15 years in 2023, with an average hike of 4.1%. 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. This trend continued for support staff and hourly workers who received the highest ratings. Share this article. 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. Market data provides a good start for navigating the year ahead. Copyright 2023 WTW. Are salary increase budgets going to be higher or lower than the prior year? US employers say they expect to increase pay by 4.1% on average for 2023, which would be the highest level in 15 years. In the Hospitality, Travel and Oil and Gas industries, companies likely lowered their salary budgets in 2020, with many going well below 3%. Approximately 28,000 sets of responses were received from companies across more than 135 countries worldwide, and 1,550 organizations in the U.S. responded. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. 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. Labor market and inflationary pressure fueling higher-than-projected increases. Base salary adjustments are one piece of the employee value proposition. Salary increases hovered around 3.0% for the past decade until the pandemic forced companies to trim budgets. Our unique perspective allows us to see the critical intersections between talent, assets and ideas the dynamic formula that drives business performance. For example, Indias salary budgets continued climbing from 8.2% in 2020 to 8.7% in 2021 and finally 9.9% in 2022. . However, in countries where inflation is particularly low, employees may see an increase in their real paythe UK is a good example. 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. 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. Tight labor markets, inflationary pressures and employee retention concerns fueled salary increases to rates not seen in nearly two decades. This is after recording an actual average pay increase of 4.62% in 2021. For example, the US median increases have risen from 3.0% (during the middle of 2021) to 3.5% (as of now). Going into 2022, workers' pay is all about supply and demandand inflation. 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. Also, take a Total Rewards perspective. U.S. employers expect to pay an average 3.4% raise to their workers in 2022, according to a Willis Towers Watson survey. By Zoe Wickens 14th January 2022 9:04 am. 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. With a strong propensity to control fixed costs, its no wonder that executives and HR look to tightly manage salary budgets. Salary increases rarely match sudden increases in inflation, and the time horizon or duration of inflation or labor market shortages affects decisions in uncertain times. 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%). Prioritizing and segmenting increases is vital for an appropriate return on investment. 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%). 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. 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. Many large U.S. employers followed Amazons lead of paying hourly workers $15 per hour, even as Amazon announced that its average hourly wage would go up to $18 per hour. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Clients depend on us for specialized industry expertise. Photo by Chris Welch / The Verge The survey found companies continue to reward top performers with significantly larger pay raises than average-performing employees. 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. (EDGAR Online via COMTEX) -- ITEM 7. Manage North American compensation products to deliver and present database results, research trend analysis: End-to . More than ever, making the most of your capital means solving a complex risk-and-return equation. Management and professional employees receiving the highest possible performance rating were granted an average increase of 4.5% this year, 73% higher than the 2.6% increases granted to those receiving average ratings. Average salary increases across regions (excluding zeros), Global Innovation and Product Development Leader, Rewards Data Intelligence. The report provides data on actual salary budget increase percentages for the past and current years, along with projected increases for next year. This translates to an average salary increase of 9.8% in 2023, compared to the actual 9.5% increase paid out in 2022. Results from WTWs July global salary budget survey, By -, 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. Step 3: Confirm contact preferences*. 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. 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). Being adaptable to ongoing market-condition changes is never easy, but indications show that employers are returning to a more-normal salary review cycle in 2022. Research by global advisory, broking, and solutions company Willis Towers Watson (WTW) found that average 2022 pay hike budgets grew from 2.9% in July 2021 to 3.2% in December. Much has been written about The Great Resignation, but it appears that workers do have more leverage to demand higher pay and benefits (as well as more flexibility) than ever before. The 2021 General Industry Salary Budget Survey was conducted by Willis Towers Watson Data Services between April and June 2021. "There's a great reprioritization of work, rewards . Best dividend capture stocks in Jan. Payout Ratio (FWD) 0.00%. Download our salary budget planning guide. WTW Research Network Newsletter. . Trends that will drive 2023 rewards decisions. 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. However, roughly one-third of participants have revised their 2022 projections upward and the 2022 average projected increase (as . Copyright 2023 WTW. In fact, 67% of organizations reported increasing their total compensation spend in 2022 as compared to 2021. 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. 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. Focused on tighter labor markets and the need to attract and retain talent, more than 80% of organizations globally held their regular salary review cycle in 2021 (compared to 63% in 2020), with budgets increased over prior years. The average actual salary increase hit 4.9% in 2022, as compared to a 4.0% actual increase amount in 2021, among those . 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. Among the major industry groups, high-tech and pharmaceutical companies project the largest increases (3.1%) followed by health care, media and financial services companies (3.0%). Most (if any) of these are not factored into a merit budget or the data reported for salary budget projections. 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%. 2021-2022 saw higher pay increase budgets. What are you trying to achieve with salary increases? The exception is Brazil, which is projecting a 6.2% salary budget increase in 2022 compared to 7.1% in 2021. Hatti Johansson 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. Form 10-K (annual report [section 13 and 15(d), not s-k item 405]) filed with the SEC 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. . 57% of organizations reported that their budget for the 2022 cycle is higher than their 2021 compensation planning cycle. More than two-fifths of organizations either have adjusted or are considering adjusting salaries more aggressively; 90% of organizations making or considering salary increase adjustments are doing two adjustments per year. It dropped significantly throughout the rest of 2020. That's the finding from a new survey by . According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. 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. Salary budget increases have remained relatively stable (arguably stagnant) in the past decade. Determine strategic goals that align with both your compensation philosophy and your organizations business strategy. of respondents in the Willis . The extreme differences experienced by industries drove a true mashup of salary budget results. One common theme to remember: Even with an increased budget, it is important to segment your workforce as you consider your goals. 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. 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. Yet, salary increases still will need to be allocated in line with market conditions and influenced by clear business priorities. 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). 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. Energy: 2.65% to 3.4%. Compensation Strategy & Design|Total Rewards, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). "As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. Click to return to the beginning of the menu or press escape to close. This year, that adaptation has been in response to rising global inflation and labor market pressures, both of which had a significant impact on how organizations finalized their 2022 pay budgets. UBS Adjusts Willis Towers Watson's Price Target to $248 From $235, Maintains Neutral Ra.. Willis Towers Watson Public : WTW Appoints Leigh Ann Rodgers Western Region Client Strateg.. Goldman Sachs Upgrades Willis Towers Watson to Buy From Neutral, Price Target is $290. Salary ranges can vary widely depending on many important factors, including education, certifications, additional skills, the number of years you have . As inflation is forecast at 2% for next year, this is nearly a full percentage point rise . This makes it more critical for organizations to have a clear strategy for awarding pay increases as effectively as possible. Finally, consider other payments you may have made during the year, like retention bonuses or recognition awards. End of main navigation menu. For example, instead of trying to apply a single global plan, group countries based on their economic, labor market conditions, or statutory requirements (e.g., mandatory indexation, collective bargaining). Limit the Use of My Sensitive Personal Information. While payroll increases are real, they are not reflected in salary budgets. 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. That projected wage growth is faster than actual raises paid in the prior . The group's data shows that the proportion of businesses expecting to freeze pay altogether is also . However, roughly one-third of participants have revised their 2022 projections upward and the 2022 average projected increase (as opposed to median) is 3.4%. This projection is followed by 2023 projections in the United Kingdom (4.0%), Germany (3.8%), and Spain (3.6%). Please note that the data is from multinational organizations with operations in Russia; data from local Russian organizations was not collected in 2022. Given the reality of worker shortages, without the pandemic we may have seen a greater impact on salary budget planning. ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. Comparing average salary increases for the top 15 largest economies, Figure 2. Of the organizations that reported higher 2022 projections at the end of the year, the average total increase was about 3.7% (compared to 2.9% for 2021 for the same group of companies). Employers need to deliver a sound employee value proposition supported by comprehensive Total Rewards programs. 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. Average salary for Aon Strategy Consultant in Redruth, England: [salary]. Nearly half of companies (46%) are planning or considering improving the employee experience to address inflationary pressures and drive retention. Explore these additional resources to expand your approach to salary planning in 2023. End of main navigation menu. Employees across the Asia Pacific Region (APAC) should expect a higher pay raise this year as employers are budgeting an overall median increase of 5.1% for 2023 across 14 markets, according to a new report from Willis Towers Watson (WTW). The survey was conducted from October 3 to November 4, 2022. Indicators show that employers are continuing to return to a more-normal salary review process this year as compared with the freezes of 2020. All rights reserved. In fact, most markets pushed their original forecasts to budgets that are higher than have been seen in nearly 20 years. Our salary surveys provide robust, detailed salary data for all industries and countries, covering executives and employees at all levels. 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). 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. 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. They also would provide compensation professionals and organization leadership a greater understanding of whats needed for the coming year (which includes those one-time merit increases) as well as a real picture for overall salary movement. It will be harder to predict what the future holds for the remaining 75% of organizations that will update salaries between January and April.

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