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WorldatWork Report: Salary Budgets Increase Stalled at 3 Percent for Third Year in a Row

Outlook is Worse for Canada Which Reported a 2.6 Percent Actual Salary Budget Increase for 2016

Aug. 2, 2016 — WASHINGTON, D.C. — According to WorldatWork's annual Salary Budget Survey, employers in the U.S. report that the average 2016 total salary increase budget is 3.0 percent (mean and median), the same as it has been for the past two years. Respondents are planning for a slight increase for 2017 salary increase budgets but only up to 3.1 percent.

"Organizations are still planning and awarding salary increases but the amount of the increases remains flat and is not changing year over year," said Kerry Chou, WorldatWork senior practice leader. "In the U.S. in particular, this may be related to inflation which remains low. The demand for larger salary increases just isn't there and low unemployment has not been enough to motivate organizations to increase salary budgets."

Percent of Employees Receiving Increases
Base salary increases (e.g., general increase/Cost-of-Living Adjustment [COLA], merit increase) are being awarded to 89 percent of employees in 2016 on average. The median figures show that most organizations will award pay increases to nearly all employees.

Promotional Increases
Promotional increases were awarded to 8.0 percent (median: 7.0 percent) of employees in 2015, one-tenth of a percentage point greater than the 7.9 percent (median: 7.0 percent) average in 2014. Of the promotional increases received, the size of the average pay increase remained unchanged at 8.4 percent (median: 8.0 percent). The planned amount that organizations spend on promotional increases in 2016 also had no change, at 1.5 percent (median: 1.0 percent) of total base salaries.

Variable Pay
The percentage of organizations using variable pay marginally rose to 84 percent in 2016. This number has been hovering around 80 percent for many years. A combination of awards based on both orga¬nization/unit success and individual performance continues to be the most prevalent type of variable pay program.

Industry Data
Although overall salary budget increase data has plateaued in the past few years, industry-specific salary increase budgeting has continued to grow and contract, creating varying mean trend lines. Similar to national figures though, most indus¬tries surveyed share a median of 3.0 percent.

Of particular note is a large fall in average salary increase budgets in Mining, Quarrying and Oil and Gas Extraction to 1.3 percent (median: 0.0 percent), from 2.5 percent last year, after leading all industries around the 4.0 percent mark just a few years ago. This drop is heavily influenced by a high number of zero-percent budgets reported from the Oil and Gas Extraction subindustry, likely connected to low oil prices. Mining, Quarrying and Oil and Gas Extraction is projecting to return near the 2015 mark with 2017 salary budget increases reported at 2.4 percent (median: 3.0 percent).

Canada Aggregated across all Canadian employee categories, regions and industries, the average total salary budget increase is 2.6 percent in 2016, a reduction from the 2.8 percent budgeted in 2015 and short of the 2.9 projected for this year.

"The economic contraction Canada experienced in 2015 continues to dampen salary budget increases," said Chou. "Economic uncertainty has employers cautious about increasing budgets and opting for conservative salary increases to attract and retain needed talent. Labor market pressures would likely need to come from multiple directions to accel¬erate wage growth."

The average total salary increase budget in Canada is projected to return to 2.8 percent in 2017 with the median total salary budget increase expected to remain firm at 3.0 percent.

Global
The "WorldatWork 2016-2017 Salary Budget Survey" studies 19 countries, and among all countries there was almost no change in the growth reported from a year ago.

India maintains the largest salary increase budget of all countries surveyed, with an average budget increase of 10.1 percent (median: 10.6 percent), despite a four-tenths of a percentage point fall from 10.5 percent (median: 11.0 percent) in 2015.

Brazil reported the only growth in average 2016 total salary budget increase at 7.9 percent (median: 8.0 percent), up from 7.5 percent (median: 7.8 percent) last year, and expects a slight rise to 8.0 percent, mean and median, in 2017. India and Brazil have retained the largest increases since WorldatWork expanded its data collection in 2012.

About the Survey
The "WorldatWork 2016-2017 Salary Budget Survey" is the largest survey of its kind with 5,759 responses from 19 countries representing nearly 15 million employees. (Global Top-Level Results). The survey closed in May 2016. Survey respondents are WorldatWork members employed in the human resources, compensation and benefits departments of mostly large U.S. companies. All data include zero-percent responses.

Credentialed journalists may request a complimentary copy of the survey report by contacting Melissa Sharp Murdock at melissa.murdock@worldatwork.org

NOTE: WorldatWork includes zero-percent responses in the analysis, unless otherwise noted, because a zero represents a decision not to budget for a program and/or employee category that exists in the responding organization.



About WorldatWork®

The Total Rewards Association


WorldatWork ( www.worldatwork.org) is a nonprofit human resources association for professionals and organizations focused on compensation, benefits, work-life effectiveness and total rewards — strategies to attract, motivate and retain an engaged and productive workforce. WorldatWork and its affiliates provide comprehensive education, certification, research, advocacy and community, enhancing careers of professionals and, ultimately, achieving better results for the organizations they serve. WorldatWork has more than 70,000 members and subscribers worldwide; 80 percent of Fortune 500 companies employ a WorldatWork member. Founded in 1955, WorldatWork is affiliated with more than 70 local human resources associations and has offices in Scottsdale, Ariz., and Washington, D.C.

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