July 2007

Pay raises projected to plateau

Employee pay raises will experience little change, if any, in 2008. The average salary budget increase for 2007 is 3.9 percent, an increase of 0.1 percent from last year, according to the 34th annual WorldatWork Salary Budget Survey (SBS).

Base pay increases may come from merit increases, cost-of-living increases, and general increases (promotional increases excluded). Salary budgets — the total amount of money allocated by an organization for all employee salaries — do not include other employment hard costs, such as medical/dental insurance, payroll taxes, or 401K match.

After seeing salary budget increases sink to historic lows in 2003 and 2004 and climb slowly from 2005 through 2007, this year’s installment indicates salary budgets may start to plateau. The WorldatWork annual survey has more than 2,400 respondents.

“With merit increases remaining under 4 percent, managers will have to think more holistically in order to produce meaningful rewards,” said Anne Ruddy, president of WorldatWork. “Compensation is one of the elements, but so are benefits, work-life, recognition, and career development.”

WorldatWork Salary Budget Survey data will be released in early August and will include results for North American regions, major metropolitan areas, major industries, as well as data by organization size.

Source: WorldatWork, www.worldatwork.org

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