Employers plan to increase their payroll budgets by 4.6% next year, the largest expected annual jump in 15 years.
This is the result of the latest international survey by the consulting firm Willis Towers Watson, which included responses from 1,550 US employers. The survey was conducted from October 3rd to November 4th.
A large majority of organizations attributed the big bump to inflation and a tight labor market.
But with headline inflation still at 7.7%, any raise an employee gets below that level effectively means they’re making less because their paycheck isn’t bringing in as much.
Frequently what companies are likely to pay more for in any given year and what they end up paying depends on market conditions. This year, for example, 70% of companies surveyed by Willis Towers Watson said they are spending more than originally planned. Total employer spent 4.2% more on salaries this year than in 2021.
Employers said they will use a variety of ways over the next year to fund bigger raises: 21% said they would re-evaluate their entire rewards package to ensure it had the greatest impact on retention and engagement; 17% said they would increase prices; and 12% said restructuring and downsizing.
How employers will distribute the additional funds for salaries will not be uniform.
Some workers grow much taller than average. This depends on several factors such as B. Employee performance and the market rate for a position, which may require upward adjustments for existing employees. New wage transparency laws will increase the pressure to offer these adjustments.
And as always, those whose skills are most in demand will likely see the biggest pay increases, said Carolina Valencia, vice president of human resources practice at Gartner. “Certain jobs will receive a disproportionate share [of the salary budget increase] because they are critical or difficult to adjust.”
Gartner expects even bigger salary increases next year. The survey of employers conducted in September and October found that organisations in North America are expecting an average increase in performance of 7%.