The group's data shows that the proportion of businesses expecting to freeze pay altogether is also . After establishing increase budgets (based, of course, on market data intelligence), it is critical to align your priorities. Long story short, prioritizing and segmenting rewards actions will be vital for an appropriate return on investment. Willis Towers Watson survey on salary trends published in October had projected a median increase of 9.3% in salaries in 2022, as against an increase of 8.1% in 2021. 2023 Actuarial Insurance Consulting Graduate Programme, Life - Edinburgh - Willis Towers Watson Careers Willis Towers Watson Careers Edinburgh, United Kingdom Found in: Jooble GB - 2 hours ago Its easy to forget that salary increase budgets are driven by several factors and, as such, should be viewed as one piece of a much larger pie. Understanding pay growth comes from studying year-over-year outcomes for different groups as well as for the entire organization. Attracting and retaining employees remains a major challenge for employers. When asked why, responses spoke to the likelihood of sustaining the gains earned in 2020 and that conservatively managing fixed costs protects companies from having to take more drastic measures if high financial gains reversed in 2021 or beyond. | 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. 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. While there typically is some discussion on what drives annual salary budget projections (AKA merit budgets) every year, 2021 felt different. US respondents to Payscale's survey project an average exempt employee salary increase of 3.8 percent for 2023. Finally, there is a certain psychology that says those in leadership that managed through the Great Recession of 2008 to 2010 still have a hangover mindset driving their conservative approach to increasing fixed costs. Together, we unlock potential. 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. Employees in the following five industries are expected to see the largest salary increases in 2022 compared with their actual increases in 2021: "There's a great reprioritization of work, rewards and careers under way, and it's putting significant pressure on compensation programs for many employers," said Catherine Hartmann, North America Rewards practice leader, WTW. The survey was conducted from October 3 to November 4, 2022. 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. 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. Approximately 18,000 sets of responses were received from companies across 130 countries worldwide. Copyright 2023 Surperformance. 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. Your ability to manage risk is key to your thriving in an uncertain world. 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. Based on 31 salaries posted anonymously by Aon Senior Client Advisor employees in Redruth, England. Average salary increases across regions (excluding zeros), Global Innovation and Product Development Leader, Rewards Data Intelligence. 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.". The survey also found employers are continuing to recognize their high performers with significantly larger raises. Willis Towers Watson Survey. Also, the United Kingdom, Spain and Mexico saw increase budgets of 1.0 to 1.2 percentage points higher in 2022 compared to 2021. Roughly the same number (17%) will raise funds by increasing prices, and 12% will resort to company restructures and reducing staff head counts. Copyright 2023 WTW. Specifically, Willis Towers Watson found in July that companies project executives, managers and other professional employees will receive average salary increases of 3% in 2022, compared to the . Taking a big-picture view ensures your salary increase process is transparent and emphasizes the connection between salary increases and business performance. Cant keep them. Employers in Asia Pacific (APAC) are budgeting for an overall average salary increase of 5.08% for executives, management & professional employees, and support staff this year, according to Willis Towers Watson's latest Salary Budget Planning Survey report. In North America, 100% of countries are expected to see an overall increase in salaries in 2022, but in the Middle East & Africa, that isn't the case. While 44% of organizations reported not changing their projections from earlier in the year, almost 1 out of 4 (23%) reported that their 2022 projections are higher now than anticipated earlier in 2021. Consider other important components of your employer-employee deal, including bonuses, long-term incentives, health and wellness benefits, career progression, and learning and development opportunities. 57% of organizations reported that their budget for the 2022 cycle is higher than their 2021 compensation planning cycle. As noted, all 15 of the largest global economies experienced higher salary budget increases in 2022 than both 2021 actual and 2022 projected numbers. Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). That is, as the unemployment rate drops, logic would suggest that pay (and salary budgets) should go up. Jan 2022 - Present 1 year 3 months. However, remember: Even with an increased budget, it is important to segment your workforce as you develop your goals. All rights reserved. Sources: 1990-1994 Data: American Compensation Association Salary Budget Survey. 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. 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. Editor's 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). Finally, it will be more important than ever to educate both managers and employees on cost of living and inflation versus the cost of labor. The 2021 headline salary increase is 1.9%, significantly lower than last year's planned increase of 2.5%, but with inflation at only 0.4%, the 2021 'real' increase is at 1.5% compared to 0.4% last year. Years of Dividend Increase. After determining your strategic goals, you can start narrowing down how to achieve those goals by setting priorities. After establishing your increases budget based on market data intelligence, it is critical to align your priorities. Average increase of salary budgets in 2023 forecasted by the 15 largest economies. This makes it important for employers to highlight and communicate the full arsenal of rewards. According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. HR pros plan for the highest pay increases in nearly 20 years, By Results from WTWs July global salary budget survey, By Please note that the data is from multinational organizations with operations in Russia; data from local Russian organizations was not collected in 2022. While salary budget projections may still be the best way to understand how others are setting salary budgets for the coming year, are they really the best barometer to reflect pay outcomes in times of extreme labor market changes? Copyright 2023 WTW. 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). However, also consider that the rate was 3.5% in January and February 2020, and then went up slightly in March 2020 to 4.4%. If How fast should pay move to effectively attract and retain talent in this market? is the question, then perhaps salary budget trend data is not the best answer. Companies gave employees an average pay increase of 2.8% in 2021. The best way to understand how your organization may need to increase pay in the future is to analyze all changes to pay throughout a complete calendar year, not just the one-time event that represents the merit pay process. Copyright 2023 WTW. 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. January 12, 2022. Global pension assets record largest annual decline since the global financial crisis. July 20, 2022. 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. The U.S. Department of Labors Employment Cost Index showed that pay rose 1.5% in the third quarter of 2021 (the latest data), up from 0.9% from the prior quarter a significant increase. Finally, remember other payments you may have made during the year retention bonuses or recognition awards. While payroll increases are real, they are not reflected in salary budgets. 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. 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. Copyright 2023 WTW. 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. Nearly half of companies (46%) are planning or considering improving the employee experience to address inflationary pressures and drive retention. 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. Manage North American compensation products to deliver and present database results, research trend analysis: End-to . That projected wage growth is faster than actual raises paid in the prior . 3.8%, 2008: 3.7%, 2009: 2.2%, 2010: 2.5%, 2011: 2.8%, 2012: 2.9%, 2013: 3%, Figure 1. Frontline hourly workers: Cant get them. It is critical for compensation professionals and organization leaders to understand the philosophical and economic factors that can and do influence compensation growth, then incorporate sound data to make defensible decisions that everyone may not like, but can live with. 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. However, we have not seen a labor market like this one in quite some time if ever. December 13, 2022 As part of a specialist Defined Contribution (DC) team which advises . The Willis Towers Watson survey on salary trends stated that there will be a median increase of 9.3 per cent in salaries in 2022, as against an increase of 8.1 per cent in 2021. Base salary adjustments are one piece of the employee value proposition. How inflation influences pay practices, Limit the Use of My Sensitive Personal Information. 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. of organizations around the world reported that 2022 salary budgets were higher than their 2021 compensation planning cycle. 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. This projection is followed by 2023 projections in the United Kingdom (4.0%), Germany (3.8%), and Spain (3.6%). In fact, 67% of organizations reported increasing their total compensation spend in 2022 as compared to 2021. For example, if pay for the same population from 2020 to 2021 was analyzed, it is likely that the findings would show a spend well above the 3% reflected in a salary budget that was planned for that same time. Trends that will drive 2023 rewards decisions. Mar 2015 - Present8 years 1 month. Overall management of human resources functions of recruiting, comp and benefit, training and development for ZZE's investment arm - China Innovative Capital Management. Lead Associate. There are growing concerns that a recession is unavoidable. Fieldset Label. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. 56% Thats according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. Your ability to manage risk is key to your thriving in an uncertain world. However, bowing to public pressure and succumbing to gut instinct wont serve anyone in the long term. Share. 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. Salary.com, Inc. Sep 01, 2021, 08:30 ET. Avg Price Recovery. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. 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. Companies are between a rock and a hard place when it comes to compensation planning, said Catherine Hartmann, North America Rewards practice leader at Willis Towers Watson. Limit the Use of My Sensitive Personal Information. Following its recent withdrawal from the European Union, the United Kingdom topped the group at 1.5 percentage points higher in 2022 compared to 2021, with increase budgets of 4.3% in 2022 compared to 2.8% in 2021. Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. 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. But increased salary budgets only make it more critical for organizations to have a clear strategy for awarding pay increases as effectively as possible, prioritize critical employees and hot jobs, and differentiate for performance. As economic challenges loom large in the U.S., a fifth of organizations (21%) that are changing salary increase budgets have said they will fund increased spending by offering compensation plans and benefit programs that their employees value most. 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. Perhaps you want to retain critical talent and resolve inequity issues. The other phenomenon we saw in 2021 was a sharp increase in starting salaries for many jobs, but especially for frontline, hourly workers as the $15 per hour bandwagon took hold. Click to return to the beginning of the menu or press escape to close. That's a far cry from just a couple of years ago. 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. WTW's Salary Budget Planning Report revealed that this projection for APAC is higher than last year . ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. In fact, most markets pushed their original forecasts to budgets that are higher than have been seen in nearly 20 years. Baird Boosts Price Target on Willis Towers Watson to $259 From $246, Maintains Outperfo.. Willis Towers Watson Public : WTW deepens investment in North American Corporate Risk & Br.. WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY, 2022 projected increases (Oct./Nov. 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. Clients depend on us for specialised industry expertise. Address your talent issues with a disciplined salary review process. However, companies in the Distribution, Health Care or Food Manufacturing businesses either kept salary budgets at 3% or perhaps even raised them. Access the 2023 Salary Budget Trends Report, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). 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. The best place to start? Then change arrived with a vengeance in 2022. Figure 1. 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%. Beijing, China. Labor market and inflationary pressure fueling higher-than-projected increases. Organizations in France, Russia, India and South Korea are all forecasting salary increase budgets that are more than half a percentage point higher in 2022 compared to the prior year. Salary ranges can vary widely depending on many important factors, including education, certifications, additional skills, the number of years you have . Clients depend on us for specialized industry expertise. 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. 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. 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. 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. While the overall A&E marketplace is relatively stable, most A&E professional liability carriers have reported an increase in severity of claims. Labor market and inflationary pressure fueling higher-than-projected increases. Willis Towers Watson. Salary budgets are not quite as responsive to changes in the labor market as we might think. WTWs July 2022 Salary Budget Planning Survey, Bombarded by questions about pay and inflation? 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. . For compensation professionals, however, it means gathering salary budget projection data to report to senior leadership and solidifying how to apply salary increases for the coming year. Copyright 2023 WTW. In April and May 2022, when the July Salary Budget Planning Survey was fielded, 34% of respondents across the largest economies said that their salary budget increases were higher than they had projected just a few months prior. managing director of work and rewards at consultancy Willis Towers Watson in Irvine, Calif. . Salary budget increases have remained relatively stable (arguably stagnant) in the past decade. Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). Finally, consider other payments you may have made during the year, like retention bonuses or recognition awards. Dallas, Texas, United States . Companies gave employees an average pay increase of 2.8% in 2021. 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. 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%. Industrial manufacturing: 2.6% to 3.4%. Through the pandemic, we saw this conservatism in several organizations in the winning industries. That could be by employee level (e.g., hourly, professional, executive), performance level, or even by areas in which youre having trouble attracting and retaining talent (e.g., digital talent, engineers). 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%). 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. Budgets in 2022 compared to 2021 ranged from 0.8 percentage points higher in Italy to 1.1 percentage points in Germany, to 1.4 percentage points in Spain. 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 data show the same result when analyzed from 2010 to 2019, demonstrating that this problem originated before the pandemic. Indicators show that employers are continuing to return to a more-normal salary review process this year as compared with the freezes of 2020. Photo by Chris Welch / The Verge 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%). A total of 1,220 companies representing a cross section of industries participated. 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. 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. Labor markets and inflation have made 2022 another year of unexpected changes. In July 2022, organizations in the 15 largest economies projected increases of 4.6% in 2023, however the December 2022 SBP tells a different story, with 2023 projections closer to 5.5%. Have feedback on this article? 2021 salary increases were notably softer than initially expected, with most markets dialing down their original forecasts to be more in line or slightly below 2020 salary budgets. 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. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. While it is common for the final increases for the year and projections for the following year to change over time as organizations learn more about the factors affecting increases (e.g., unemployment, supply and demand of labor), the change typically is not this dramatic. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. 2021 was another year of change, with tightening labor markets pushing salary increases around the world. News provided by. More than ever, making the most of your capital means solving a complex risk-and-return equation. Even the 1.0% jump we saw from 2021 to 2022 is significant in terms of organizations total spend on compensation. Dont just focus on base salary adjustments. Average US Pay Increase Projected . 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 (NASDAQ: WLTW), a leading global advisory, broking and solutions company.