At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. In these cases, organizations are taking a range of actions, including more frequent pay increases, cost-of-living adjustments and even linking salaries and/or bonus payments to foreign currencies. End of main navigation menu. 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 2023 and beyond. In 2023, compensation and HR professionals will need to continually monitor labor markets and economic conditions and be flexible enough to act quickly when needed. 3.8%, 2008: 3.7%, 2009: 2.2%, 2010: 2.5%, 2011: 2.8%, 2012: 2.9%, 2013: 3%, Figure 1. WTW's latest Salary Budget Planning Report, based on a survey conducted between April and June 2021, found . However, rising inflation in Argentina and Venezuela made these countries the exceptions to the rule, with increases of 7.3 and 279.9 percentage points higher in 2021 vs. 2020. Modern Slavery Act Transparency Statements, Data Processing Protocol - Investment Consulting UK, Transactional and Advisory Services Privacy Notice, COVID-19 FCA Business Interruption Test Case, Concerns related to cost management, such as inflation or rising cost of supplies (48%), Anticipated stronger financial results, actual or forecasted (43%). Cant keep them. Then it completely skyrocketed when COVID-19 hit. Limit the Use of My Sensitive Personal Information. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Thats almost a full percentage point higher. In addition to pay pressures, three in four respondents (75%) also are experiencing problems with attracting and retaining talent a figure that has nearly tripled since 2020. Today, organizations are deciding how to focus their compensation spend for the greatest impact. High unemployment started to ease in the summer of 2020 and was back below 7% by the end of the year. 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. According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. 2021. This is after recording an actual average pay increase of 4.62% in 2021. "There's a great reprioritization of work, rewards . Bonuses for support staff and production and manual labor employees averaged 8.0% and 5.5%, respectively. Organizations in France, Russia, India and South Korea are all forecasting . UK employers increased the amount of money they put aside for staff pay rises over the second half of last year, it has emerged. 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. Maintaining an on-going relationship with clients and gaining an understanding of the clients' business and industry. 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. Share this article. 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). Average actual salary increases hit 5.0% percent in 2022 as compared to 4.0% in 2021 among organizations in the top 15 largest economies in the world. COVID-19 also affected the financial health of different industries to the extremes. The most cited reasons for the higher projections were: Resilience tempered with cautious optimism will be the 2022 mantra for employers, with most looking to increase salaries and provide bonuses for employees particularly for critical or high-performing talent. By Kathryn Mayer. 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. 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. 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 . Address your talent issues with a disciplined salary review process. While it is common for the final increases for the year and projections for the following year to change over time as organizations learn more about the factors affecting increases (e.g., unemployment, supply and demand of labor), the change typically is not this dramatic. Editor's 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). For more countries, budgets for the upcoming cycle have changed from increases projected earlier in 2020. However, considering that changes in salary budgets often lag economic trends by 6 to 12 months, it appears that we are now seeing salary budgets catch up with labor market dynamics. In 2020 when the pandemic began, Fusco adds, just . We have answers. UBS Adjusts Willis Towers Watson's Price Target to $248 From $235, Maintains Neutral Ra.. Willis Towers Watson Public : WTW Appoints Leigh Ann Rodgers Western Region Client Strateg.. Goldman Sachs Upgrades Willis Towers Watson to Buy From Neutral, Price Target is $290. Salaries at Willis Towers Watson range from an average of $49,528 to $127,613 a year. In Europe, projections for 2023 salary increases are also well above 2022 actuals with the highest increases in Belgium (10.5%), the United Kingdom (5.1%), Germany (4.6%) and Spain (3.6%). 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. Reliable market data that supports these critical decisions. Also, remember that every organization will have its own set of goals and priorities. According to the survey, companies project average salary increases of 3.0% for executives, management and professional employees, and support staff in 2022. 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. That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. Labor markets and inflation have made 2022 another year of unexpected changes. The survey was conducted from October 3 to November 4, 2022. On the one hand, employers need to continue effectively managing fixed costs as they rebound from the pandemic. Prioritizing and segmenting increases is vital for an appropriate return on investment. Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success-and provide perspective that moves you. Zhongzhi Enterprise Group Co., Ltd. Jan 2014 - Feb 20173 years 2 months. This makes it important for employers to highlight and communicate the full arsenal of rewards. Fieldset Label. Willis Towers Watson employees with the job title Insurance Broker make the most with an average annual salary . The survey also found employers are continuing to recognize their high performers with significantly larger raises. The question boils down to, What am I trying to achieve with these salary increases? This sounds simple; however, a clear answer is not always easy. 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 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. 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. 2022 salary budgets: With worker shortages, why arent they higher? But these actions dont happen simultaneously. This is noteworthy, as it is above 2020s increase of 3.8%. While the overall A&E marketplace is relatively stable, most A&E professional liability carriers have reported an increase in severity of claims. Unparalleled salary benchmarking database Each year, we collect salary data on over 35 million employees in more than 11,000 organizations, across more than 130 countries. While countries where there is centralized union negotiations (e.g., Germany, Spain) or mandatory indexation (e.g. Indicators show that employers are continuing to return to a more-normal salary review process this year as compared with the freezes of 2020. End of main navigation menu. They also would provide compensation professionals and organization leadership a greater understanding of whats needed for the coming year (which includes those one-time merit increases) as well as a real picture for overall salary movement. US employers say they expect to increase pay by 4.1% on average for 2023, which would be the highest level in 15 years. Based on 31 salaries posted anonymously by Aon Senior Client Advisor employees in Redruth, England. 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. 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. All rights reserved. To address ongoing challenges, organizations are deciding how to focus their compensation spend for the greatest impact. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. Copyright 2023 WTW. Distributed by Public, unedited and unaltered, on 13 January 2022 14:20:02 UTC. This translates to an average salary increase of 9.8% in 2023, compared to the actual 9.5% increase paid out 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. Market data provides a good start for navigating the year ahead. Note: This data is from multinational organizations with operations in Russia; data from local Russian organizations was not collected for the July report. 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. Most (if any) of these are not factored into a merit budget or the data reported for salary budget projections. End of main navigation menu. How inflation influences pay practices, Limit the Use of My Sensitive Personal Information. Retail industry companies are projecting average raises of 2.9% next year. Among the major industry groups, high-tech and pharmaceutical companies project the largest increases (3.1%) followed by health care, media and financial services companies (3.0%). 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. And a quarter of employers plan to give increases in the range of 5%-7% in 2023. Or they can utilize all of these options, especially with millions of Americans quitting their jobs, changing careers or postponing looking for employment.. The survey also revealed over nine in 10 companies (91%) awarded annual performance bonuses this year based on 2020 performance, significantly higher than 76% of companies that awarded them last year. Facing ongoing change in 2021, organizations around the world were forced to continually adapt and be resilient. July 20, 2022. 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. of organizations around the world reported that 2022 salary budgets were higher than their 2021 compensation planning cycle. Finally, remember other payments you may have made during the year retention bonuses or recognition awards. Description. ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. However, the duration and scale are unknown. Click to return to the beginning of the menu or press escape to close. WTW Research Network Newsletter. A total of 1,004 U.S. employers responded. Of these actions, 65% of companies say they are in place with no end date until 2023 or later, while 23% havent put any actions in place but are planning to do so. More than ever, making the most of your capital means solving a complex risk-and-return equation. Clients depend on us for specialized industry expertise. More than ever, making the most of your capital means solving a complex risk-and-return equation. Clients depend on us for specialized industry expertise. 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. Salary budgets are not quite as responsive to changes in the labor market as we might think. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion includes. Working shoulder to shoulder with our clients, we uncover opportunities for sustainable successand provide perspective that moves you. All rights reserved. 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. Companies are between a rock and a hard place when it comes to compensation planning, said Catherine Hartmann, North America Rewards practice leader at Willis Towers Watson. Nearly three in four respondents (74%) cited the tight labor market for increasing their budgets from prior projections, while only one-third cited anticipated stronger financial results (34%) and inflation or the rising cost of supplies (31%). A quarterly update showcasing the latest cutting-edge research from the WTW Research Network (WRN) and research partners. This trend continued for support staff and hourly workers who received the highest ratings. 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 United States is projecting an average increase of 4.6% in 2023, which is above the 2022 average actual increase of 4.2% the highest since 2008 and higher than 3.1% in 2021 and 3% in 2020. This is up from the average 2.7% increases companies granted this year. Industrial manufacturing: 2.6% to 3.4%. Only Australia, India, Italy, United States and Brazil saw average increase budgets in 2021 above those in 2020. Much has been written about The Great Resignation, but it appears that workers do have more leverage to demand higher pay and benefits (as well as more flexibility) than ever before. 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. There are several findings that are worth noting from our survey of global practices. Copyright 2023 WTW. Salary budget increases have remained relatively stable (arguably stagnant) in the past decade. Results from WTWs July global salary budget survey, By Supplemental tactics including sign-on bonuses, equity and cash retention, and recognition enhancements plus employee experience drivers such as enhanced career enablement, emphasis on mental wellbeing, focus on DEI [diversity, equity and inclusion], and learning and reskilling opportunities can combine to improve the effectiveness of a compensation program. TORONTO, ON, September 28, 2021 Pay raises are making a comeback. One in three employers bumped up original salary increase projections. Companies gave employees an average pay increase of 2.8% in 2021. 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. 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. This makes it more critical for organizations to have a clear strategy for awarding pay increases as effectively as possible. Average salary for Aon Senior Client Advisor in Redruth, England: [salary]. 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. Not only did 96% of organizations increase salaries in 2022 (vs. 63% in 2020), overall salary increase budgets and total compensation spend also rose to new levels, according to data in WTWs December 2022 Salary Budget Planning (SBP) Report. Hatti Johansson | Limit the Use of My Sensitive Personal Information. Your ability to manage risk is key to your thriving in an uncertain world. History shows that salary budgets dropped in prior recessions and never actually recovered to pre-recession levels, as shown in Figure 1. However, in countries where inflation is particularly low, employees may see an increase in their real paythe UK is a good example. Management and professional employees receiving the highest possible performance rating were granted an average increase of 4.5% this year, 73% higher than the 2.6% increases granted to those receiving average ratings. Companies gave employees an average pay increase of 2.8% in 2021. Copyright 2023 WTW. While the optimism shown by different countries comes with hints of caution, 2022 will likely be a better year for salary increases. Willis Towers Watson Public Ltd (WLTW) Stock Data. With more money at play than has been the case in nearly 20 years, it is critical to align your priorities to the salary increase budget you establish (which, of course, should be based on sound market data). 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 . Your ability to manage risk is key to your thriving in an uncertain world. Taking a big-picture view ensures your salary increase process is transparent and emphasizes the connection between salary increases and business performance. 56% Share. Even the 1.0% jump we saw from 2021 to 2022 is significant in terms of organizations total spend on compensation. Employees across the Asia Pacific Region (APAC) should expect a higher pay raise this year as employers are budgeting an overall median increase of 5.1% for 2023 across 14 markets, according to a new report from Willis Towers Watson (WTW). We have answers, Limit the Use of My Sensitive Personal Information, Concerns related to cost management, such as inflation or rising cost of supplies (57%). Trends that will drive 2023 rewards decisions. Best dividend capture stocks in Jan. Payout Ratio (FWD) 0.00%. By Zoe Wickens 14th January 2022 9:04 am. As noted, base salary represents one of the largest fixed labor costs for employers, and salary increases have a compounding effect on fixed costs over time that must be managed intelligently. 2021), President, Chief Executive Officer & Director. Given ongoing uncertainties and the growing threat of a recession, it is important for compensation and HR professionals to thoughtfully balance the demand for higher salaries to address inflationary pressures and labor market challenges against the risk of increased and permanent cost structures. 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. December 13, 2022 As part of a specialist Defined Contribution (DC) team which advises . Compensation Strategy & Design|Total Rewards, Benefits Administration and Outsourcing Solutions, Executive Compensation and Board Advisory, Financial, Executive and Professional Risks (FINEX). Mar 2015 - Present8 years 1 month. Overall management of human resources functions of recruiting, comp and benefit, training and development for ZZE's investment arm - China Innovative Capital Management. Have feedback on this article? Organizations in smaller economies shared a similar fate, mostly averaging similar salary budgets in 2021 when compared to 2020. The survey found companies continue to reward top performers with significantly larger pay raises than average-performing employees. Willis Towers Watson Survey. . 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 Salary Budget Planning Report is compiled by WTWs Data Services practice. 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. Clients depend on us for specialized industry expertise. They also are looking at how to focus their salary budgets for the greatest impact, with 2022 projections showing that 96% of companies globally will increase salaries and far fewer will implement salary freezes than in 2021 or 2020. 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 . ARLINGTON, Va., April 13, 2017 (GLOBE NEWSWIRE) -- Increases in total compensation for chief executive officers (CEOs) at the nation's largest c. Among organizations that reported higher 2022 actual salary budgets compared to 2021, the most cited reasons for those increased budgets were: In October and November 2022, when the December SBP survey was fielded, 45% of respondents in the 15 largest economies said their salary budget increases were higher than projections just a few months earlier in July. 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. You will need to make it a point to help them see beyond salary increases to other actions that have an impact on the workforce. Approximately 18,000 sets of responses were received from companies across 130 countries worldwide. Clients depend on us for specialized industry expertise. Baird Boosts Price Target on Willis Towers Watson to $259 From $246, Maintains Outperfo.. Willis Towers Watson Public : WTW deepens investment in North American Corporate Risk & Br.. WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY, 2022 projected increases (Oct./Nov. These are followed by Germany, Spain, United Kingdom, China, Canada and Mexico, which have a projection of 4 percentage points higher in 2022 compared to 2021. Read more at The Business Times. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. The report provides data on actual salary budget increase percentages for the past and current years, along with projected increases for next year. As inflation is forecast at 2% for next year, this is nearly a full percentage point rise . 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). While companies are boosting salary budgets, bigger pay raises alone wont be enough to help address their attraction and retention challenges. But increased salary budgets only make it more critical for organizations to have a clear strategy for awarding pay increases as effectively as possible, prioritize critical employees and hot jobs, and differentiate for performance. The group of hyper-inflation countries (e.g., Argentina, Turkey) experiencing hyperinflation of 30% or more are in a different category altogether. The extreme differences experienced by industries drove a true mashup of salary budget results. Click to return to the beginning of the menu or press escape to close.