2021), President, Chief Executive Officer & Director. WILLIS TOWERS WATSON PLC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION A.. Willis Towers Watson Public : WTW launches pooled employer plan in the U.S. January 3, 2023. The group of hyper-inflation countries (e.g., Argentina, Turkey) experiencing hyperinflation of 30% or more are in a different category altogether. For now, continued higher budgets are projected in most of the worlds largest economies. 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. This feels comparatively low especially if you look back at April 2020 when unemployment spiked at 14.8%. 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. Your ability to manage risk is key to your thriving in an uncertain world. Copyright 2023 WTW. The U.S. Department of Labors Employment Cost Index showed that pay rose 1.5% in the third quarter of 2021 (the latest data), up from 0.9% from the prior quarter a significant increase. End of main navigation menu. Most organizations in the 15 largest economies experienced a dip in 2021 compared to their 2020 actual budgets, increasing their salary budgets by an average of 4.0% among those granting increases. Address your talent issues with a disciplined salary review process. Copyright 2023 WTW. For example, one goal may be to retain critical roles and resolve any possible inequity issues. 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. End of main navigation menu. Are salary increase budgets going to be higher or lower than the prior year? This is up from the average 2.7% increases companies granted this year. More than ever, making the most of your capital means solving a complex risk-and-return equation. While the optimism shown by different countries comes with hints of caution, 2022 will likely be a better year for salary increases. Hatti Johansson Click to return to the beginning of the menu or press escape to close. The highest increases forecasted are in India (10.0%), Russia (8.6%), Brazil (7.5%), Mexico (6.4%) and China (6.0%). It also shrank 10.6% among the historical leadership talent pool (workers ages 45-54). According to the survey, nearly three in four respondents (74%) cited the tight labor market for increasing their budgets from prior . Based on 31 salaries posted anonymously by Aon Senior Client Advisor employees in Redruth, England. 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. 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. That projected wage growth is faster than actual raises paid in the prior . 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). Thats almost a full percentage point higher. All rights reserved. Its easy to forget that salary increase budgets are driven by several factors and, as such, should be viewed as one piece of a much larger pie. In the end, these analyses would confirm salary growth that eclipses the 3% salary budget. Click to return to the beginning of the menu or press escape to close. 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). Action, reaction or no action? 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. 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. 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. It will be interesting to observe whether these nations are, in fact, able to maintain these levels. "There's a great reprioritization of work, rewards . Copyright 2023 WTW. 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. Also, the United Kingdom, Spain and Mexico saw increase budgets of 1.0 to 1.2 percentage points higher in 2022 compared to 2021. If so, then focus your actions on leveraging salary budgets to adjust any major diversity, equity and inclusion issues (including a fair pay analysis) and prioritizing in-demand and business-critical talent. Copyright 2023 WTW. | Nearly half of companies (46%) are planning or considering improving the employee experience to address inflationary pressures and drive retention. White Plains, New York. 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. Finally, remember other payments you may have made during the year retention bonuses or recognition awards. The Salary Budget Planning Report is compiled by WTWs Reward Data Intelligence practice. To address ongoing challenges, organizations are deciding how to focus their compensation spend for the greatest impact. Years of Dividend Increase. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. While companies are boosting salary budgets, bigger pay raises alone wont be enough to help address their attraction and retention challenges. Read more at The Business Times. Case in point: WTW's 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. 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. All rights reserved. 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 . Companies gave employees an average pay increase of 2.8% in 2021. That may mean changes to how salary budgets have historically responded to economic pressures. 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. For example, the US median increases have risen from 3.0% (during the middle of 2021) to 3.5% (as of now). Salary increases hovered around 3.0% for the past decade until the pandemic forced companies to trim budgets. A quarterly newsletter containing insights and resources related to construction risk in the United Kingdom. Ensure your salary increase process is transparent and emphasizes the connection between salary increases and business performance. 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 . . In April and May 2022, when the July Salary Budget Planning Survey was fielded, 34% of respondents across the largest economies said that their salary budget increases were higher than they had projected just a few months prior. Clients depend on us for specialized industry expertise. As economic challenges loom large in the U.S., a fifth of organizations (21%) that are changing salary increase budgets have said they will fund increased spending by offering compensation plans and benefit programs that their employees value most. That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. On the one hand, employers need to continue effectively managing fixed costs as they rebound from the pandemic. 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. 41% of organizations will have a higher salary increase budget in 2022 than 2021. For instance, as a result of recognizing that labor shortages, and not inflation, are the primary driver of growing salary budgets, many employers are targeting certain segments such as hourly workers, digital talent and workers with in-demand skills to receive higher pay.". "While companies are boosting salary budgets, bigger pay raises alone won't be enough to help address their attraction and retention challenges. 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). History shows that salary budgets dropped in prior recessions and never actually recovered to pre-recession levels, as shown in Figure 1. Willis Towers Watson. The best place to start? 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%). Willis Towers Watson Public Ltd (WLTW) Stock Data. As noted, all 15 of the largest global economies experienced higher salary budget increases in 2022 than both 2021 actual and 2022 projected numbers. Reliable market data that supports these critical decisions. 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. The report provides data on actual salary budget increase percentages for the past and current years, along with projected increases for next year. 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%). 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%. There are several findings that are worth noting from our survey of global practices. For those having this debate, here are a few considerations: Making salary decisions can be challenging when topics like inflation, labor shortages and wage increases are creating a stir in headlines. Salary.com, Inc. Sep 01, 2021, 08:30 ET. This translates to an average salary increase of 9.8% in 2023, compared to the actual 9.5% increase paid out in 2022. Facing ongoing change in 2021, organizations around the world were forced to continually adapt and be resilient. As inflation is forecast at 2% for next year, this is nearly a full percentage point rise . With reliable market data that supports the critical and defensible decisions you must make. The report summarizes the findings of WTW's annual survey on salary movement and reviews practices as a means of helping companies with their compensation planning for 2022 and beyond. 2000-2002, 2008 Data: Towers Watson Database on Merit Increase Budgets taking averages of WWDS, Mercer, and World at Work Surveys Belgium), your salary increases will need to follow the guidelines. According to the survey, companies project average salary increases of 3.0% for executives, management and professional employees, and support staff in 2022. 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%). July 20, 2022. The 2021 General Industry Salary Budget Survey was conducted by Willis Towers Watson Data Services between April and June 2021. 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. Determine strategic goals that align with both your compensation philosophy and your organizations business strategy. WTWs December 2022 Salary Budget Planning (SBP) Report, Bombarded by questions about pay and inflation? 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. Companies gave employees an average pay increase of 2.8% in 2021. January 12, 2022. 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%). From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. More than ever, making the most of your capital means solving a complex risk-and-return equation. With attraction and retention issues persisting, employers should consider the overall employee experience and not just salary increases, said Lesli Jennings, North America leader, Work Rewards and Careers, WTW. 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. Comparing average salary increases for the top 15 largest economies, Figure 2. Going into 2022, workers' pay is all about supply and demandand inflation. 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. Organizations have had to adjust their projections as global labor market challenges have unfolded. 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). This year, that adaptation has been in response to rising global inflation and labor market pressures, both of which had a significant impact on how organizations finalized their 2022 pay budgets. Average salary for Aon Senior Client Advisor in Redruth, England: [salary]. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. 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. Many large U.S. employers followed Amazons lead of paying hourly workers $15 per hour, even as Amazon announced that its average hourly wage would go up to $18 per hour. The survey was conducted in October and November 2021. July 13, 2022. Prioritizing and segmenting increases is vital to ensure an appropriate return on investment. 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.. After all, you cant respond to everything happening in the market, all at once. Dont just focus on base salary adjustments. Average US Pay Increase Projected . Early Fall may signal the beginning of autumn colors, pumpkin spice everything, and sweater weather for some. Yet, salary increases still will need to be allocated in line with market conditions and influenced by clear business priorities. 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. Based on 19 salaries posted anonymously by Aon Strategy Consultant employees in Redruth, England. 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. Together, we unlock potential. 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. Limit the Use of My Sensitive Personal Information. Again: We ask why? of organizations around the world reported that 2022 salary budgets were higher than their 2021 compensation planning cycle. Lead Associate. Set aside salary budget projections to look at real wage growth. As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. The survey found companies continue to reward top performers with significantly larger pay raises than average-performing employees. Zhongzhi Enterprise Group Co., Ltd. Jan 2014 - Feb 20173 years 2 months. But these actions dont happen simultaneously. Maintaining an on-going relationship with clients and gaining an understanding of the clients' business and industry. The second-gen Sonos Beam and other Sonos speakers are on sale at Best Buy. Labor market and inflationary pressure fueling higher-than-projected increases. South African private-sector workers are set to receive an average pay rise of 5.5% in 2022, which is a cautious improvement over the 4.7% average increase paid this year, according to salary research from global advisory Willis Towers Watson. Thats according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. More than ever, making the most of your capital means solving a complex risk-and-return equation. Percentage of companies freezing salaries, Figure 3. Your ability to manage risk is key to your thriving in an uncertain world. Looking at 2022, greater scrutiny on the labor market will continue among both employers and employees. As noted, unemployment in January and February 2020 before the pandemic took hold was lower than it is today. Limit the Use of My Sensitive Personal Information. 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. From determining how work gets done and how its valued to improving the health and financial wellbeing of your workforce, we add perspective. Labor market and inflationary pressure fueling higher-than-projected increases. Organizations in France, Russia, India and South Korea are all forecasting salary increase budgets that are more than half a percentage point higher in 2022 compared to the prior year. December 13, 2022 As part of a specialist Defined Contribution (DC) team which advises . It will be harder to predict what the future holds for the remaining 75% of organizations that will update salaries between January and April. 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. 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. 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%. Your ability to manage risk is key to your thriving in an uncertain world. WTW's Salary Budget Planning Report revealed that this projection for APAC is higher than last year . A quarterly update showcasing the latest cutting-edge research from the WTW Research Network (WRN) and research partners. 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. 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. 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.. 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. Salary ranges can vary widely depending on many important factors, including education, certifications, additional skills, the number of years you have . For example, you may want to retain critical roles and resolve inequity issues. Trends that will drive 2023 rewards decisions. The 2021 General Industry Salary Budget Survey was conducted by Willis Towers Watson Data Services between April and June 2021. COVID-19 also affected the financial health of different industries to the extremes. Willis Towers Watson survey on salary trends published in October had projected a median increase of 9.3% in salaries in 2022, as against an increase of 8.1% in 2021. 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. US employers say they expect to increase pay by 4.1% on average for 2023, which would be the highest level in 15 years. Limit the Use of My Sensitive Personal Information. Distributed by Public, unedited and unaltered, on 13 January 2022 14:20:02 UTC. Share. 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. While there typically is some discussion on what drives annual salary budget projections (AKA merit budgets) every year, 2021 felt different. Our Bloomberg On-Site Support (BOS) teams provide 24/7 on-site technical solutions to Bloomberg's internal and external customers in more than 75 countries. We would have faced a steady decline in available workers rather than the drastic layoffs and unemployment increases that we experienced in spring 2020. After establishing your increases budget based on market data intelligence, it is critical to align your priorities. For example, Indias salary budgets continued climbing from 8.2% in 2020 to 8.7% in 2021 and finally 9.9% in 2022. High unemployment started to ease in the summer of 2020 and was back below 7% by the end of the year. 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. Consider other important components of the employer-employee deal including: Your actions can range from improving the employee experience to placing a broad emphasis on diversity, equity and inclusion initiatives or implementing greater workplace flexibility. A total of 1,004 U.S. employers responded. Fieldset Label. There are growing concerns that a recession is unavoidable. . Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. The global pandemic affected the U.S. economy beginning in early 2020. 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. One in three employers bumped up original salary increase projections. Executives, management and professional . But increased salary budgets only make it more critical for organizations to have a clear strategy for awarding pay increases as effectively as possible, prioritizing critical employees and hot jobs, and differentiating for performance. 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. That's according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company. Finance: 2.7% to 3.5%. 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.