By CityTownInfo.com Staff
July 24, 2009
Two surveys released this week indicated that employers increased salaries this year by the smallest percentage in decades.
The Wall Street Journal reports that the study was conducted by Hay Group and Watson Wyatt Worldwide Inc., and concluded that average pay raises for 2009 were between 2 and 3 percent. Next year, the firms predict that median raises will increase to 3 percent--the smallest forecast increase in the 29 years that Hay Group has conducted its survey.
The statistics are not surprising, given that the economic downturn has resulted in the loss of millions of jobs and forced employers to slash benefits and require employees to take time off with no pay. "This has been a very difficult year for both employers and their workers," said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt, who was quoted by PR Newswire. "But there is some good news on the horizon. Employers plan to give larger raises next year, and many plan to reinstate previously cut pay raises as planning for an eventual economic recovery continues."
The survey found that bonuses were also significantly reduced. Funding for annual incentive awards dropped from 99 percent in 2007 to 82 percent in 2008. In 2009, they expect to be funded at 75 percent.
"Bonuses are certainly a casualty of the recession this year," said Sejen. "Still, it remains crucial for employers to find ways to reward top-performing workers for their role in contributing to the company's bottom line."
CNNMoney.com offered a bright side to the discouraging statistics: Since the Consumer Price Index has fallen in the last 12 months, the numbers might not be as bad as they seem. Keeping the CPI in mind, a 2 to 3 percent raise is really like 3 to 4 percent.
Still, experts agreed that the news is not good. "It's a pretty bleak picture for employees," noted Kenan Abosch, compensation practice leader for consulting firm Hewitt Associates, who was quoted in the Journal.
But David Wise, senior consultant at Hay Group, remarked that most workers won't be upset about the statistics. "Today, people are more focused on job security than they are on a pay increase," he pointed out. "If they can keep a job, they're already ahead of the game."