Determine strategic goals that align with both your compensation philosophy and your organizations business strategy. What does inflation mean for the insurance market? But these actions dont happen simultaneously. Or they can utilize all of these options, especially with millions of Americans quitting their jobs, changing careers or postponing looking for employment.. Willis Towers Watson Survey. Clients depend on us for specialised industry expertise. 2022 salary budgets: With worker shortages, why arent they higher? 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. Email author Lori Wisper and continue the conversation. A quarterly newsletter containing insights and resources related to construction risk in the United Kingdom. U.S. employers expect to pay an average 3.4% raise to their workers in 2022, according to a Willis Towers Watson survey. But increased salary budgets only make it more critical for organizations to have a clear strategy for awarding pay increases as effectively as possible, prioritizing critical employees and hot jobs, and differentiating for performance. It will be harder to predict what the future holds for the remaining 75% of organizations that will update salaries between January and April. Given the reality of worker shortages, without the pandemic we may have seen a greater impact on salary budget planning. 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. Again: We ask why? Your ability to manage risk is key to your thriving in an uncertain world. While the overall A&E marketplace is relatively stable, most A&E professional liability carriers have reported an increase in severity of claims. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. While the optimism shown by different countries comes with hints of caution, 2022 will likely be a better year for salary increases. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. 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. Cant keep them. | Together, we unlock potential. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. The survey also found employers are continuing to recognize their high performers with significantly larger raises. Last year, like many things unique to 2021, this meant trying to understand why U.S. salary budgets looked like they werent moving much higher than the 3% theyd been for the past decade. January 3, 2023. UK employers increased the amount of money they put aside for staff pay rises over the second half of last year, it has emerged. Finally, consider other payments you may have made during the year, like retention bonuses or recognition awards. 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 . 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. The 25% of organizations that update their salaries between June and December will be able to leverage the markets to determine their actions. End of main navigation menu. Average salary increases across regions (excluding zeros), Global Innovation and Product Development Leader, Rewards Data Intelligence. WILLIS TOWERS WATSON PLC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION A.. Willis Towers Watson Public : WTW launches pooled employer plan in the U.S. 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. 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. 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. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion includes. Market data provides a good start for navigating the year ahead. 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 Salary Budget Planning Report is compiled by WTW's Data Services practice. Our salary surveys provide robust, detailed salary data for all industries and countries, covering executives and employees at all levels. 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. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. 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%. 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). 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. Photo by Chris Welch / The Verge of organizations around the world reported that 2022 salary budgets were higher than their 2021 compensation planning cycle. Merit increases in the General Industry entering and during the last three periods of U.S. economic downturn, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). | managing director of work and rewards at consultancy Willis Towers Watson in Irvine, Calif. . COVID-19 also affected the financial health of different industries to the extremes. 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. 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. More than ever, making the most of your capital means solving a complex risk-and-return equation. Salary increases hovered around 3.0% for the past decade until the pandemic forced companies to trim budgets. Clients depend on us for specialized industry expertise. Note: This data is from multinational organizations with operations in Russia; data from local Russian organizations was not collected for the July report. 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.. Perhaps you want to retain critical talent and resolve inequity issues. January 12, 2022. Click to return to the beginning of the menu or press escape to close. The Salary Budget Planning Report is compiled by WTWs Data Services practice. Remember that a one-size-fits-all approach wont work. In fact, 67% of organizations reported increasing their total compensation spend in 2022 as compared to 2021. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. It felt like a true mystery. -, 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. On the other hand, companies recognize they need to boost compensation with sign-on, referral and retention bonuses; skill premiums; midyear adjustments; or pay raises. Have feedback on this article? What are you trying to achieve with salary increases? It is important to take a total rewards perspective. 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. By focusing on health and wellness benefits, workplace flexibility, careers and DEI, organizations can position themselves as the employer of choice for their current and prospective employees.. 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. Employers looked to 2021 with optimism and an eye toward recovery, but many organizations around the world had to adjust to tumultuous business conditions that emerged from the pandemic. One common theme to remember: Even with an increased budget, it is important to segment your workforce as you consider your goals. Prioritizing and segmenting increases is vital for an appropriate return on investment. Manage North American compensation products to deliver and present database results, research trend analysis: End-to . 3% of a larger total payroll is still 3%. Also, the United Kingdom, Spain and Mexico saw increase budgets of 1.0 to 1.2 percentage points higher in 2022 compared to 2021. 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? By Zoe Wickens 14th January 2022 9:04 am. Your ability to manage risk is key to your thriving in an uncertain world. 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. 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%). Had the pandemic never happened, we likely would still be facing labor shortages. Companies gave employees an average pay increase of 2.8% in 2021. 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 highest increases forecasted are in India (10.0%), Russia (8.6%), Brazil (7.5%), Mexico (6.4%) and China (6.0%). 3.8%, 2008: 3.7%, 2009: 2.2%, 2010: 2.5%, 2011: 2.8%, 2012: 2.9%, 2013: 3%, Figure 1. Most (if any) of these are not factored into a merit budget or the data reported for salary budget projections. 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. With workers shortages and low unemployment, why arent we seeing higher merit budgets for the coming year? could easily be heard in the virtual hallways across corporate America second only to the question, With inflation on the rise, shouldnt we be thinking about raising salary budgets?". Comparing average salary increases for the top 15 largest economies, Figure 2. 2021.Last Update: May 30, 2022. are making to help attract and retain employees is boosting salary increase budgets for 2022. . WTWs July 2022 Salary Budget Planning Survey, Bombarded by questions about pay and inflation? 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. 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. 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. Your ability to manage risk is key to your thriving in an uncertain world. Base salary adjustments are one piece of the employee value proposition. Dive Brief: Amid accelerating inflation and tight competition for workers, U.S. companies plan to boost employee pay next year at a higher rate than in 2021, projecting 3% salary increases for executives, management, professional employees and support staff, and 2.8% higher payrolls for production and manual labor employees, according to a Willis Towers Watson survey. . 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: "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. Your ability to manage risk is key to your thriving in an uncertain world. By After establishing your increases budget based on market data intelligence, it is critical to align your priorities. 2022 will see salaries and other aspects of life return to some sense of normality and more companies implementing regular salary reviews and higher increases than in 2021. 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. Results from WTWs July global salary budget survey, By By Kathryn Mayer. 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. 2021-2022 saw higher pay increase budgets. 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. 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. Clients depend on us for specialized industry expertise. Step 3: Confirm contact preferences*. 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. In the end, if employees raise real-time data they find online to show they are getting a pay cut because your salary increases dont match inflation, you have some work to do to educate them about basic economics and labor markets. The average actual salary increase hit 4.9% in 2022, as compared to a 4.0% actual increase amount in 2021, among those . More than ever, making the most of your capital means solving a complex risk-and-return equation. Today, organizations are deciding how to focus their compensation spend for the greatest impact. WTW Research Network Newsletter. 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 . While companies are boosting salary budgets, bigger pay raises alone wont be enough to help address their attraction and retention challenges. 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. After all, you cant respond to everything happening in the market, all at once. Click to return to the beginning of the menu or press escape to close. Companies gave employees an average pay increase of 2.8% in 2021. January 28, 2022. | The group of hyper-inflation countries (e.g., Argentina, Turkey) experiencing hyperinflation of 30% or more are in a different category altogether. That's the finding from a new survey by . That is, as the unemployment rate drops, logic would suggest that pay (and salary budgets) should go up. 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. This is up from the average 2.7% increases companies granted this year. Looking across the Eurozone, where inflation exceeded 10.6% on average in October 2022, it is a reminder that each country should be viewed individually, as there are notable differences in year-on-year increases. For example, you may want to retain critical roles and resolve inequity issues. It also shrank 10.6% among the historical leadership talent pool (workers ages 45-54). The best place to start? Percentage of companies freezing salaries, Figure 3. 56% Working shoulder to shoulder with our clients, we uncover opportunities for sustainable successand provide perspective that moves you. If so, then focus your actions on leveraging salary budgets to adjust any major diversity, equity and inclusion issues (including a fair pay analysis) and prioritizing in-demand and business-critical talent. For example, in regions where inflation remains relatively low (e.g., Middle East, Asia), salary increases may remain above inflation. Dont just focus on base salary adjustments.