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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. The average salary for Actuarial Analyst at companies like WILLIS TOWERS WATSON in the United States is $78,127 as of October 27, 2022, but the range typically falls between $68,656 and $87,599. Hatti Johansson In fact, the tight labor market has been an influencing factor in the decision of nearly seven in 10 companies (68%) to increase salary budgets. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Facing ongoing business and economic conditions in 2022, organizations around the world have been forced to stay current with whats happening in the employee marketplace and how that affects pay and then adapt accordingly. Companies gave employees an average pay increase of 2.8% in 2021. There are growing concerns that a recession is unavoidable. Global Innovation and Product Development Leader, Rewards Data Intelligence, Average increase of salary budgets in 2023 forecasted by the 15 largest economies, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). 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. WTWs July 2022 Salary Budget Planning Survey, Bombarded by questions about pay and inflation? 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%. 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. As noted, all 15 of the largest global economies experienced higher salary budget increases in 2022 than both 2021 actual and 2022 projected numbers. Canadian 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 . 96% 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. 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?". 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. Address your talent issues with a disciplined salary review process. Only Australia, India, Italy, United States and Brazil saw average increase budgets in 2021 above those in 2020. 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. News provided by. Form 10-K (annual report [section 13 and 15(d), not s-k item 405]) filed with the SEC Today, a discussion on salary budget projections in the U.S. cannot exclude the notion of how or, more importantly, whether inflation should be factored into salary increase budgets. 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. End of main navigation menu. 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. And in the 15 largest economies, that 2023 projection is 1.5 percentage points higher than the 4.0% actual increase in 2021 and the 5.0% average actual increase granted in 2022. 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. Also, make sure you take a Total Rewards perspective. This translates to an average salary increase of 9.8% in 2023, compared to the actual 9.5% increase paid out in 2022. ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. 2021), President, Chief Executive Officer & Director. We saw only moderate changes in 2021 salary budget projections when employers were planning for 2022. Mar 2015 - Present8 years 1 month. The best place to start? Manage North American compensation products to deliver and present database results, research trend analysis: End-to . This is up from the average 2.7% increases companies granted this year. Companies gave employees an average pay increase of 2.8% in 2021. More than ever, making the most of your capital means solving a complex risk-and-return equation. 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. 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 . | Click to return to the beginning of the menu or press escape to close. After all, you cant respond to everything happening in the market, all at once. Limit the Use of My Sensitive Personal Information. Market data provides a good start for navigating the year ahead. If so, then your priorities would be to adjust any major diversity, equity and inclusion issues using salary budgets even some fair pay analytics and consider in-demand and business-critical talent. 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. The survey of 1,004 U.S. companies, conducted during October and November 2021, found nearly one in three respondents (32%) increased their salary increase projections from earlier in the year. 41% of organizations will have a higher salary increase budget in 2022 than 2021. 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 specialized industry expertise. This makes it more critical for organizations to have a clear strategy for awarding pay increases as effectively as possible. Willis Towers Watson (WTW) reports that employers are planning an average salary increase for exempt employees of 4.1 percent, slightly up from last year's four percent. Organizations in smaller economies shared a similar fate, mostly averaging similar salary budgets in 2021 when compared to 2020. Clients depend on us for specialized industry expertise. 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.. Click to return to the beginning of the menu or press escape to close. 2000-2002, 2008 Data: Towers Watson Database on Merit Increase Budgets taking averages of WWDS, Mercer, and World at Work Surveys 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. Copyright 2023 WTW. Given the crescendo of these questions, this article helps explain why projections are what they are, and serves as food for thought about how to think of salary budgets as a barometer of overall compensation spend in the future. The United States is projecting an average increase of 3.4% compared to 3.1% in 2021 and 3% in 2020, which is the highest since 2008. Companies are budgeting an overall average increase of 4.1 percent for 2023 Tight labor market drives U.S. employers to boost 2023 pay raises 2022 Salary Budget Planning Report - Global (July . Yet, salary increases still will need to be allocated in line with market conditions and influenced by clear business priorities. 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. . 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. In fact, most markets pushed their original forecasts to budgets that are higher than have been seen in nearly 20 years. Figure 1. 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. Thats because employees get promoted, they get counteroffers and retention monies, and equity increases. Or they can utilize all of these options, especially with millions of Americans quitting their jobs, changing careers or postponing looking for employment.. Copyright 2023 WTW. Prioritizing and segmenting increases is vital for an appropriate return on investment. All rights reserved. There are several findings that are worth noting from our survey of global practices. All rights reserved. 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). Bonuses, which are generally tied to company and employee performance goals, averaged 16.0% of salary for management and professional employees. 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. Compensation Strategy & Design|Total Rewards, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). The survey was conducted in October and November 2021. managing director of work and rewards at consultancy Willis Towers Watson in Irvine, Calif. . Approximately 28,000 sets of responses were received from companies across more than 135 countries worldwide, and 1,550 organizations in the U.S. responded. More than ever, making the most of your capital means solving a complex risk-and-return equation. 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. Then, start narrowing how to achieve those goals by setting priorities. The United States is projecting an average increase of 4.1% in 2023, which is aligned with the 2022 average actual increase of 4.0% the highest since 2008 and higher than 3.1% in 2021 and 3% in 2020. 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. The 2021 General Industry Salary Budget Survey was conducted by Willis Towers Watson Data Services between April and June 2021. Clients depend on us for specialized industry expertise. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. 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. Increased budgets are evident across most of the worlds largest economies. July 13, 2022. 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. In 2020, we saw financial outcomes of extremes that resulted in some industries having significant financial gains and others huge losses. Hatti Johansson Percentage of companies freezing salaries, Figure 3. 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. 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. Clients depend on us for specialized industry expertise. Only 3% of employers freezing salaries. White Plains, New York. 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. Set aside salary budget projections to look at real wage growth. U.S. employers expect to pay an average 3.4% raise to their workers in 2022, according to a Willis Towers Watson survey. of respondents in the Willis . Understanding pay growth comes from studying year-over-year outcomes for different groups as well as for the entire organization. It will be harder to predict what the future holds for the remaining 75% of organizations that will update salaries between January and April. Frontline hourly workers: Cant get them. 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%. 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. Salary.com, Inc. Sep 01, 2021, 08:30 ET. 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. Notably, raises are returning to pre-pandemic levels. To address ongoing challenges, organizations are deciding how to focus their compensation spend for the greatest impact. Thus, population trends show that there are and will continue to be fewer workers to fill needed positions. "As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. That is, as the unemployment rate drops, logic would suggest that pay (and salary budgets) should go up. Ensure your salary increase process is transparent and emphasizes the connection between salary increases and business performance. 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). For example, one goal may be to retain critical roles and resolve any possible inequity issues. For example, you may want to retain critical roles and resolve inequity issues. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. The 15 largest economies are forecasting an average increase of 4.9% in 2023, which is 0.9 percentage points higher than the 4% actual increase in 2021 and aligned with the 4.9% average increase granted in 2022. Case in point: WTWs 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. That may mean changes to how salary budgets have historically responded to economic pressures. That's the finding from a new survey by . It will be interesting to observe whether these nations are, in fact, able to maintain these levels. With reliable market data that supports the critical and defensible decisions you must make. However, bowing to public pressure and succumbing to gut instinct wont serve anyone in the long term. Clients depend on us for specialized industry expertise. Your ability to manage risk is key to your thriving in an uncertain world. 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. July 20, 2022. 57% of organizations reported that their budget for the 2022 cycle is higher than their 2021 compensation planning cycle. Your ability to manage risk is key to your thriving in an uncertain world. Even with this lag, it would be natural to expect greater movement than the 2022 median projections of roughly the same 3% theyve been for so long, but that hasnt happened. Organizations in France, Russia, India and South Korea are all forecasting . . Average US Pay Increase Projected . It is important to take a total rewards perspective. 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. 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. But its important to remember that every organization will have its own set of goals and unique priorities. Salaries at Willis Towers Watson range from an average of $49,528 to $127,613 a year. 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.That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. Finally, consider other payments you may have made during the year, like retention bonuses or recognition awards. While countries where there is centralized union negotiations (e.g., Germany, Spain) or mandatory indexation (e.g. As noted, unemployment in January and February 2020 before the pandemic took hold was lower than it is today. WTW's Salary Budget Planning Report revealed that this projection for APAC is higher than last year . Lead Associate. By Kathryn Mayer. 2021. Copyright 2023 WTW. Of the organizations that reported higher 2022 projections at the end of the year, the average total increase was about 3.7% (compared to 2.9% for 2021 for the same group of companies). At an average of 5.3% increase for PMETs and support staff, the Asia Pacific region, especially the emerging markets, is looking at noticeably higher pay in 2022. 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. Reliable market data that supports these critical decisions. 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. 3.8%, 2008: 3.7%, 2009: 2.2%, 2010: 2.5%, 2011: 2.8%, 2012: 2.9%, 2013: 3%, Figure 1. Willis Towers Watson Public Ltd (WLTW) Stock Data. However, the duration and scale are unknown. This feels comparatively low especially if you look back at April 2020 when unemployment spiked at 14.8%. The extreme labor market swings in such a short time meant that salary budget planning never really caught up to the craziness of the pandemic. 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. Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). Share. 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. 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. What does inflation mean for the insurance market? The report summarizes the findings of WTWs annual survey on salary movement and reviews practices as a means of helping companies with their compensation planning for 2022 and beyond. Also, take a Total Rewards perspective. Determine strategic goals that align with both your compensation philosophy and your organizations business strategy. Organizations have had to adjust their projections as global labor market challenges have unfolded. High unemployment started to ease in the summer of 2020 and was back below 7% by the end of the year. Average salary increases across regions (excluding zeros), Global Innovation and Product Development Leader, Rewards Data Intelligence. Remember to segment your workforce, for example by employee level (e.g., hourly, professional, executive), performance level or jobs in which youre having trouble attracting and retaining talent.