Employees’ pay rises despite economy
September 11, 2008 by Sam NarisiPosted in: Attracting talent, In This Week's E-Newsletter, Latest News & Views, Salary negotiations
With the economy in a slump, are companies offering employees lower salaries?
Not this year, according to a recent WorldatWork survey. On average, companies plan to increase salary budgets by 3.9% over the next year. The same goes for salaries the following year, too.
Why doesn’t the economy seem to be having a negative effect on employee compensation?
One reason employers are keeping raises steady is rising inflation that’s eating up bigger and bigger chunks of employees’ salaries.
Therefore, employers need to keep offering raises to attract and retain workers.
Tags: compensation, economy, pay, wages
September 12th, 2008 at 11:54 am
An pay “increase” due to inflation is NOT a raise, though. It is a “truing up” of current salary to the purchasing power you promised (denominated in the dollars or Euros of the time) the employee at the time he took the job.
September 12th, 2008 at 12:41 pm
I think you’re on target when you state the rising cost of living / rising inflation is one of the big factors behind the reason salary increases are still strong in spite of the economy. I also think the lack of experienced, skilled workers in some fields is driving higher salaries. In the engineering field, for example, at least in my region, it is very difficult to find qualified, experienced candidates for our open positions. So we are increasing wages to retain those we value and are having to hire at a higher rate of pay as we grow. Because turnover is costly, you want to retain your top talent. It make sense to be proactive when you can.
September 12th, 2008 at 2:31 pm
In my job, most of the salaried employees took a 10% paycut last November. What we really need is a raise, but if anything, we’d like to get our 10% back, at the very least!!
None of the hourly people, that have been here for more than 18 months, have had a raise in almost 3 years. I don’t know why we still have so many long-term employees!
September 16th, 2008 at 5:35 pm
Our company just initiated a cost of living increase of 8% to “staff” employees, plus additional percentage based on performance and longevity. That additional percentage could have been up to 10% for some, making a total of 18% salary increase. What I would like to point out is 8% was also the increase for the starting wage. This was a due increase as starting salaries are much lower than company competitors, turnover is extremely high, and there has not been a wage increase in over 4 years. This increase has boosted employee morale and decreased the risk of employees leaving for better salaries.