willis towers watson salary increase 2022

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. By Kathryn Mayer. 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. The highest increases forecasted are in India (10.0%), Russia (8.6%), Brazil (7.5%), Mexico (6.4%) and China (6.0%). December 13, 2022 As part of a specialist Defined Contribution (DC) team which advises . However, bowing to public pressure and succumbing to gut instinct wont serve anyone in the long term. Fieldset Label. Click to return to the beginning of the menu or press escape to close. 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. Working shoulder to shoulder with our clients, we uncover opportunities for sustainable successand provide perspective that moves you. 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. Given the reality of worker shortages, without the pandemic we may have seen a greater impact on salary budget planning. Copyright 2023 WTW. More than ever, making the most of your capital means solving a complex risk-and-return equation. 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.. However, the duration and scale are unknown. Limit the Use of My Sensitive Personal Information. . 4.9% ARLINGTON, VA, July 20, 2021 Pay raises are making a comeback. That's the finding from a new survey by . But, for now, it appears that the same Lets not be the first to significantly raise salary budgets mentality is at play for 2022 projections. Form 10-K (annual report [section 13 and 15(d), not s-k item 405]) filed with the SEC The report provides data on actual salary budget increase percentages for the past and current years, along with projected increases for next year. It dropped significantly throughout the rest of 2020. 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. 2021 was another year of change, with tightening labor markets pushing salary increases around the world. Clients depend on us for specialised industry expertise. The extreme differences experienced by industries drove a true mashup of salary budget results. End of main navigation menu. Hatti Johansson Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success-and provide perspective that moves you. This translates to an average salary increase of 9.8% in 2023, compared to the actual 9.5% increase paid out in 2022. Organizations should prioritize their actions based on the needs of both employers and employees and pay close attention to market data to inform any changes.. For example, Indias salary budgets continued climbing from 8.2% in 2020 to 8.7% in 2021 and finally 9.9% in 2022. More than ever, making the most of your capital means solving a complex risk-and-return equation. That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. This projection is followed by 2023 projections in the United Kingdom (4.0%), Germany (3.8%), and Spain (3.6%). Our salary surveys provide robust, detailed salary data for all industries and countries, covering executives and employees at all levels. The average actual salary increase hit 4.9% in 2022, as compared to a 4.0% actual increase amount in 2021, among those . Are salary increase budgets going to be higher or lower than the prior year? Within some industries, base . 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. This is noteworthy, as it is above 2020s increase of 3.8%. What are you trying to achieve with salary increases? Email author Lori Wisper and continue the conversation. Some had record earnings and paid out significantly above-target bonuses but, in many cases, targeted at or below the typical 3% salary increase level that also was reported as the going rate in 2020. 2021 salary increases were notably softer than initially expected, with most markets dialing down their original forecasts to be more in line or slightly below 2020 salary budgets. However, roughly one-third of participants have revised their 2022 projections upward and the 2022 average projected increase (as . 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). Most (if any) of these are not factored into a merit budget or the data reported for salary budget projections. Click to return to the beginning of the menu or press escape to close. It is important to take a total rewards perspective. For some companies, that kind of increase represents millions in investment. Indicators show that employers are continuing to return to a more-normal salary review process this year as compared with the freezes of 2020. Dont underestimate the importance of this education and communication effort. Then, start narrowing how to achieve those goals by setting priorities. 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. In North America, 100% of countries are expected to see an overall increase in salaries in 2022, but in the Middle East & Africa, that isn't the case. The group's data shows that the proportion of businesses expecting to freeze pay altogether is also . Copyright 2023 WTW. In the Hospitality, Travel and Oil and Gas industries, companies likely lowered their salary budgets in 2020, with many going well below 3%. 0 yrs. 2021. Average salary increases across regions (excluding zeros), Global Innovation and Product Development Leader, Rewards Data Intelligence. Address your talent issues with a disciplined salary review process. Even with these ongoing pressures, pay increases and the salary budgets that fund them must be allocated in line with market conditions and directed by clear business priorities. "There's a great reprioritization of work, rewards . From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. What does inflation mean for the insurance market? managing director of work and rewards at consultancy Willis Towers Watson in Irvine, Calif. . As labor markets tighten and inflation rises in certain countries, all eyes are on salary budgets and, so far, they seem to be inching above prior years. TORONTO, ON, September 28, 2021 Pay raises are making a comeback. Attracting and retaining employees remains a major challenge for employers. COVID-19 also affected the financial health of different industries to the extremes. 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. Companies gave employees an average pay increase of 2.8% in 2021. It seems that once we hit a new floor on salary budgets, it tends to stick for a while and slowly inch its way back up, only to be slammed down again by the next economic downturn. Overall salary increases in the US will be the most since 2007, a survey of 1.550 organizations from workplace consultant Willis Towers Watson (WTW) found, and above the 4.2% increase for this . Had the pandemic never happened, we likely would still be facing labor shortages. The data show the same result when analyzed from 2010 to 2019, demonstrating that this problem originated before the pandemic. To tackle the competitive labor market, more than half of respondents (57%) have hired candidates higher in the relevant salary range, while a further 76% have adjusted or are considering adjusting salary ranges more aggressively, increasing ranges by 2% to 5%. Maintaining an on-going relationship with clients and gaining an understanding of the clients' business and industry. Tight labor markets, inflationary pressures and employee retention concerns fueled salary increases to rates not seen in nearly two decades. Following its recent withdrawal from the European Union, the United Kingdom topped the group at 1.5 percentage points higher in 2022 compared to 2021, with increase budgets of 4.3% in 2022 compared to 2.8% in 2021. 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. December 13, 2022 As part of a specialist Defined Contribution (DC) team which advises . 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). Figure 1. That is, as the unemployment rate drops, logic would suggest that pay (and salary budgets) should go up. Long story short, prioritizing and segmenting rewards actions will be vital for an appropriate return on investment. 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%. 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 . Clients depend on us for specialized industry expertise. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. There are several findings that are worth noting from our survey of global practices. End of main navigation menu. According to WTWs John Bremen, despite overall population growth (11.9%) and labor force growth (4.5%), the labor force shrank 3.4% from 2010 to 2020 among the historical entry-level talent pool (workers ages 16 to 24). of organizations around the world reported that 2022 salary budgets were higher than their 2021 compensation planning cycle. Today, organizations are deciding how to focus their compensation spend for the greatest impact. see the December . Hatti Johansson Explore these additional resources to expand your approach to salary planning in 2023. Understanding pay growth comes from studying year-over-year outcomes for different groups as well as for the entire organization. Also, the United Kingdom, Spain and Mexico saw increase budgets of 1.0 to 1.2 percentage points higher in 2022 compared to 2021. The best way to understand how your organization may need to increase pay in the future is to analyze all changes to pay throughout a complete calendar year, not just the one-time event that represents the merit pay process. In late 2021, projections stood at 4.3% in the 15 largest economies, compared to 2022 average actual salary budgets of 4.9% among those granting increases in the July 2022 report. End of main navigation menu. 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. Market data provides a good start for navigating the year ahead. It also shrank 10.6% among the historical leadership talent pool (workers ages 45-54). 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. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. Prioritizing and segmenting increases is vital for an appropriate return on investment. US respondents to Payscale's survey project an average exempt employee salary increase of 3.8 percent for 2023. 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). 2000-2002, 2008 Data: Towers Watson Database on Merit Increase Budgets taking averages of WWDS, Mercer, and World at Work Surveys Bonuses for support staff and production and manual labor employees averaged 8.0% and 5.5%, respectively. 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. Your ability to manage risk is key to your thriving in an uncertain world. It will be harder to predict what the future holds for the remaining 75% of organizations that will update salaries between January and April. More than two-fifths of organizations either have adjusted or are considering adjusting salaries more aggressively; 90% of organizations making or considering salary increase adjustments are doing two adjustments per year. In 2020 when the pandemic began, Fusco adds, just . Unlike the financial crisis of 2008 to 2010, when virtually every industry was impacted the same way, the economic fallout of 2020 was a health crisis certainly, but financial systems remained sound and strong. Again: We ask why? Action, reaction or no action? News provided by. Also Read "While companies are boosting salary budgets, bigger pay raises alone won't be enough to help address their attraction and retention challenges. 3.8%, 2008: 3.7%, 2009: 2.2%, 2010: 2.5%, 2011: 2.8%, 2012: 2.9%, 2013: 3%, Figure 1. Results from our latest Salary Budget Planning Survey suggest that 96% of companies globally will increase salaries. Consider other important components of your Total Rewards package, including bonuses, long-term incentives, health and wellness benefits even career progression and learning and development opportunities. Lead Associate. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. 2021), President, Chief Executive Officer & Director. Jan 2022 - Present 1 year 3 months. This includes both monetary and nonmonetary actions to attract and retain employees particularly for critical or high-performing talent. In the end, if employees raise real-time data they find online to show they are getting a pay cut because your salary increases dont match inflation, you have some work to do to educate them about basic economics and labor markets. 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. Organizations have had to adjust their projections as global labor market challenges have unfolded. Approximately 18,000 sets of responses were received from companies across 130 countries worldwide. Share this article. Copyright 2023 WTW. 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. Its easy to forget that salary increase budgets are driven by several factors and, as such, should be viewed as one piece of a larger picture. 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. Nearly half of companies (46%) are planning or considering improving the employee experience to address inflationary pressures and drive retention. All rights reserved. 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. In countries that are experiencing historically high inflation (e.g., U.S., UK), in addition to higher salary budgets that may still lag inflation, organizations may need more creative solutions, such as targeting by talent segment or offering one-time cost-of-living adjustments. But these actions dont happen simultaneously. Click to return to the beginning of the menu or press escape to close. The larger raises coincide with a surge in demand for labor and a shortage of supply of hourly workers and specific professional roles with premium skills. Participants in the December Salary Budget Planning Survey pushed their 2022 actual increases notably higher than both actual 2021 increases and initial 2022 projections. Salary budgets remained steady overall at 3%, in part because of the aforementioned lag, but also because, while unemployment was high, it was only high for about three months. For example, instead of trying to apply a single global plan, group countries based on their economic, labor market conditions, or statutory requirements (e.g., mandatory indexation, collective bargaining). This sounds like a simple question, but a clear answer isnt always easy. Your ability to manage risk is key to your thriving in an uncertain world. 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. Hatti Johansson Life and health insurance: 2.7% to 3.5%. Employees in the following five industries are expected to see the largest salary increases in 2022 compared with their actual increases in 2021: "There's a great reprioritization of work, rewards and careers under way, and it's putting significant pressure on compensation programs for many employers," said Catherine Hartmann, North America Rewards practice leader, WTW. A quarterly update showcasing the latest cutting-edge research from the WTW Research Network (WRN) and research partners. Salary.com, Inc. Sep 01, 2021, 08:30 ET. While its true that employees buying power is diminished when salary increases are lower than inflation, remember that pay never goes down even when inflation goes down.