As the economy slowly gains steam, more employers plan to implement salary increases, but the raises will be fairly small, according to Mercer’s 2009/2010 U.S. Compensation Planning Survey.
For 2010, Mercer reports that only 14% of employers are planning across-the-board freezes, down from 30% during the recession. The pendulum swings to pay increases, however, reveals that the average spike is expected to be 2.7% in 2010, down from 3.2% in 2009.
“While planned 2010 base increases have dropped a bit from employers’ projections in April and are less than 2009 increases, this is still positive news given the fewer firm-wide pay freezes and staff reductions planned now compared to this time last year,” says Loree Griffith, a principal with Mercer’s rewards consulting business.
Meanwhile, short-term incentive payouts are estimated to fall slightly in 2010, despite employers’ efforts to focus on retaining employees and engaging top talent.
Overall, average payouts (as a percentage of base pay) for all employee groups are reasonably stable, Mercer’s analysts explain. The highest-performing employees are projected to earn average payouts of two to four times more than the lowest-performers.
“The marketplace for top talent remains competitive,” explains Griffith. “Despite budgetary constraints, growth sectors are boosting salaries for select employees, and overall in some cases, in an effort to attract and engage talent necessary to continue at existing performance levels,” she adds. The Mercer’s survey, which was conducted in November 2009, reflects the responses from more than 350 mid-size and large employers.
Other key findings include:
- While 20% of durable goods manufacturers and 18% of services firms are expected to maintain pay freezes in 2010, less than 5% of consumer goods and insurance firms are expected to have freezes.
- Compared to the expected average pay increase of 2.7% in 2010, employers within the consumer goods and high-tech industries have the highest projected pay increase at 3% percent.
- Education is among these sectors with a projected base pay increase of 2.2% along with health and medical insurance projected at 2.4%.
