US employers cut pay-increase forecasts
? Many US employers are having to offset the effects of a lacklustre financial year by reigning in their pay strategy and tightening the purse strings.
With final 2003 business results now in sight, more than 4 in 10 US employers are scaling back their 2004 pay-increase budgets for at least some portion of their employee population, finds a new survey from Mercer Human Resource Consulting, a global consulting agency. At these organizations, pay increases originally budgeted for an average of 3.6% now will average about 3.2%.
The survey, which was conducted in October and includes responses from more than 500 employers, provides an update to Mercer's 2003/2004 US Compensation Planning Survey, conducted in April. At that time, US employers had budgeted overall average pay increases of about 3.5% for 2004. Now, with cutbacks planned by about 40% of the employers surveyed, overall pay increases for all employers are expected to average 3.3% in 2004.
The sombre news about pay increases is compounded by other Mercer survey findings regarding short-term incentives (i.e., annual bonuses). Only about one-quarter of the employers surveyed said that incentive payouts would be larger in 2003 than they were in 2002.