After years of upheaval due to the COVID-19 pandemic, employees around the globe have some good news to celebrate: Raises are on the rise and expected to continue that trajectory into 2023.
A new survey from WorldatWork reveals that salary increase budgets reached their highest level in 20 years. In the U.S., they rose to an average of 4.1% in 2022 with a 3.8% median and are projected to again be at a 4.1% average in 2023.
Now in its 49th year, “WorldatWork’s Salary Budget Survey” (the longest-running survey of its kind) offers business leaders robust, year-over-year data aimed to help them design competitive compensation plans and total rewards strategies that attract and retain high-performing employees, according to Sue Holloway, director of WorldatWork.
The more than 2,000 organizations represented in the survey cover nearly 14 million employees from 19 countries.
This year’s findings heighten a trend that survey authors had already been seeing. In 2021, U.S. respondents projected that the following year’s total salary increase budgets would rise modestly from a 3% average to 3.3%, while the median increase was predicted to stay the same at 3%.
The WorldatWork survey follows other similar findings about the upward trajectory of salaries in light of a tight labor market as well as rising inflation. A recent Salary.com report, which surveyed 1,000 HR professionals, found that nearly half of U.S. employers plan higher year-over-year budget increases next year compared to 2022 (a median raise of 4% across all employee categories). Another report from Willis Towers Watson found that employers are budgeting a 4.1% salary increase for 2023, and Gartner found that 63% of executives plan to make compensation adjustments in response to high inflation. It’s all proof that competitive salary strategies will remain top of mind for HR leaders as they plan for next year.
Holloway says the higher predicted average suggests that some employers expect to compensate for pay increases that were delayed or deferred in prior years and to address increasing labor market pressure. That trend, along with the “volatile economic environment,” Holloway says, “challenge HR pros to leverage data and think strategically as they formulate 2023 compensation budget recommendations and negotiate with CFOs,” Holloway says.
When asked how certain they felt about their 2023 salary increase budget projections, nearly half of respondents (48%) felt moderately certain while more than a quarter (26%) felt slightly certain. WorldatWork will conduct a special pulse poll in the coming months to monitor whether projections are changing as the year unfolds.
The survey also shed light on how raises are being doled out. The average time between increases across all employee categories mirrored the historical average of 12 months, with executives’ average at a slightly greater 12.3-month average. Meanwhile, on average, participating organizations reported awarding at least some base salary increases (e.g. general increase/COLA, merit increase) to 88% of employees in 2022.