In February this year, services firm Aon revised its salary increment trend to 9.9% versus an average of 9.4% that it had forecast in September 2021. While nearly 80% of organizations reported that they are just in the preliminary stages of determining their 2023 annual . Employers' compensation budgets are set to rise 3.3% for merit budgets and 3.5% for total budgets in 2022, a survey by HR consulting firm Mercer found a slight increase from the 2.8% merit and . The fierce competition for talent and the anticipated economic recovery is putting pressure on salary increases for next year. However, it should be noted that these budget numbers are only preliminary and should be considered to be one of several inputs used to determine an organizations budget. As a result of the last two years of adapting and evolving, organizations globally have charted new business and talent strategies, and this has had a significant impact on the direction of reward programs. There are several findings that are worth noting from our survey of global practices. All Mercer events about talent, investment, and health issues. Given the continued impact of the pandemic on business conditions, accelerating inflation, and labor supply and demand imbalances, organizations felt compelled to adjust their compensation increase budgets in the latter part of 2021 and early 2022. Survey: Transportation Policies | Extended to March 3, Survey: Strategic mobility management | Participate by March 17, Survey: Long-term international assignment policies and practices | Participate by March 17, Survey: Salary Budget Snapshot E2 | Participate by May 5. Mercers approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Despite knowing this, we have continued to ask survey participants to give us their budget projections in August, largely because, well, clients and consultants alike are used to survey vendors publishing budget numbers at this time of year. 46% of . These include: Increased utilization of select non-financial reward programs. Given the typical budget approval process at any organization, we get it. Separate promotion budgets still dont seem to be the norm only 24% indicated that they have them. Take a proactive approach to managing your workforce in a competitive job market. Interestingly, the Technology industry typically leads the market with their compensation awards, yet the survey found that while Technology employers are right at the national average for total increase (4.2%), there is a slight lag on the national average for merit increases (3.7%) a departure from previous years. Salary increase planning made easy. Enter the characters shown in the image. Other industries such as High Tech and Consumer Goods also saw increases over prior year. If your company runs on a calendar financial year, then its likely that you are putting together the numbers and justification for annual increases, structure adjustments, and other critical compensation management elements. The 2023 limits will reflect increases in the Consumer Price Index for All Urban Consumers (CPI-U) from the third quarter of 2021 to the third quarter of 2022. Mercer, an American asset management firm, projected an increase of 9% in salaries across industries in 2022. Simply revisit the survey and click the submit button to confirm previously entered . Given the financial uncertainty that currently exists combined with the tight labor market, employers should consider setting flexible budgets and prioritize investments in critical and fast-moving segments, such as their hourly workforce," said Lauren Mason,Senior Principal in Mercer's Career practice. The projected increase is slightly . This high rate of employees receiving increases results in the typical organization not being able to significantly differentiate increases between competent and outstanding performers. The actual average merit increase delivered so far in 2021 was 2.8%, but that number dips to 2.5% when including those companies that did not deliver increases. Across industries, Financial Services is leading the market at 4.0% merit and 4.7% total increases. For example, the US median increases have risen from 3.0% (during the middle of 2021) to 3.5% (as of now). More than 93 per cent of Australian organisations are planning salary increases for their workforce in 2022 of 3 per cent, up 0.5 per cent from 2021, according to Mercer's annual Total Remuneration Survey (TRS) . Employers are also recognizing the value of knowing what skills reside within the organization, how demand for skills can swiftly shift with the market, and the importance of deploying or developing existing employees to meet changing needs. Our look at pressing problems and solutions for board directors. With remote work here to stay, employees can cast a much wider net in their job searches than when they were limited by geography. Asia, 21 December 2021 - Companies in Asia Pacific are forecasting a median 5.4% increase in overall salaries for 2022 amid uncertainty as economies start to reopen, compared to 5.1% in 2021 and 4.8% in 2020, according to Mercer's latest Salary Movement Snapshot Survey 1. The Federal Reserve has already begun taking aggressive action for this to happen. More than 30 million viewers are expected to watch football this Thanksgiving. Scroll down for more information on this survey. Need help? Still, only 30% of companies will communicate an employees grade/band upon request. Workspan Daily provides fresh news, every weekday. It can be difficult to keep up with relevant compensation trends and how they impact your organization. Explore Mercers latest thinking to see how were helping to redefine the world of work, reshape retirement and investment outcomes, and unlock real health and well-being. As a result, forecasted increases are likely understated to actual total increase practices by as much as 25-33% of the overall budget. Mercer's Total Remuneration Survey 2023 is a salary and benefits study that offers in-depth reports and benchmarks for total compensation analysis. Workspan Magazine supplies in-depth analysis on pressing issues. Organizations that recognize the specific lifestyles of their employees will have a head start in attracting and retaining toptalent. E2 focuses on 2023 and 2024 salary increase budgets (total and merit). This will continue to drive dissatisfaction with compensation programs and pressure employers to increase wages in the months ahead. If you have previously participated in the 2023 SBS survey, you can return to the survey, and enter your email address to receive the link to your existing survey submission. Likewise, we are seeing an increase in the total increase budget for 2023: 4.2% for 2023, compared to 3.8% in 2022. Most employers reported that the pay increases are in direct response to . Current & projected data on pay increases, structure adjustments, and more. Likewise, we are seeing an increase in the total increase budget for 2023: 3.9% for 2023, compared to 3.4% in 2022. Give us a call at 1-855-286-5302 or email surveys@Mercer.com. Its hard to say. Only 2% of participants responded that they did not use factors and instead provided an across the board increase, which would indicate that increasing pay across the board for inflation or cost of living is a prevalent practice. Please see ourPrivacy Policyfor details. Notably, when asked what they were doing to offset market inflation for their employees, only 34% indicated that they would provide an ad hoc off-cycle wage review and/or adjustment, while a similar percentages indicated they that were not planning to do anything. The future of rewards is shifting. Recruitment efforts are expected to increase in 2022, with more than three in 10 companies on an average intending to add headcount with another third undecided, compared to less than two in 10 in 2021. Lets dive a little deeper into some of these trends in compensation planning. Total increases were slightly higher at 2.9%, decreasing to 2.6% when factoring in those not providing increases. In our Inside Employees Minds research, covering monthly expenses was the number one concern of low wage workers, and it has become an even greater challenge amidst inflation as workers face escalating gas prices and more expensive grocery bills. Most organizations address gaps in competitiveness over time through merit budgets, but the current labor market warrants a more aggressive approach to market adjustments to ensure that pay is competitive for all employees not just in aggregate. Hiring across the region has also accelerated in the second half of 2021, as businesses shift their attention from reducing staff to hiring more, albeit still not at pre-pandemic levels. The disconnect in compensation budgets and rising inflation is creating frustration with workers, who have seen all of their wage gains eroded by rising costs. Merit increase budgets are tracking at 3.2%*, while total increase budgets, which also include other types of budgeted base pay increases, such as promotion awards, are tracking at 3.5%. How can they be made to feel like they belong in your organization when not sharing office space and coffeebreaks? We continue to stand at a crossroads in the world of work. Many employers are reporting an increase in attrition rates as employees begin to look for more appealing offers, both in their current industry and in new ones altogether. Individual performance is still the most common factor that employers use to determine the size of an individuals annual increase. First off, use this as directional information and combine it with additional sources. According to the International Monetary Fund, Asia Pacific remains the fastest growing region in the world, but the gap in economic recoveries across the region is widening, with risks tilted to the downside due to uncertain pandemic dynamics as well as vaccine coverage and efficacy against new virus variants. The typical practice is a 1.5X difference in increase percentages between these performers (e.g, an outstanding performer receives a 4.5% increase vs. a competent performer receiving 3.0%). How much larger will increase budgets be for 2023? We are in the midst of a labor shortage in the US, and wages are moving up especially for hourly pay. Discover whats next in the world of rewards from Korn Ferrys Client Partner, Ben Frost. Time is limited. For more information, visit mercer.com. Visit the US & Canada Participation Station! Resources: Leading in the New Shape of Work. Theres one thing certain about the future of work: unpredictability. These products are all included in Talent All Access Portal+, but can also be purchased separately. 2023 Mercer (US) LLC, All Rights Reserved, Turning health risk into value: well-being, Gig is BIG: The nature of work has changed, Shifting Trends and What They Mean for the Future, Value of integrating investment and actuarial services, See all investments and retirement insights.