BONUSES PAY RAISES SURVEY WATSON WYATT
US - According to a new survey by Watson Wyatt, pay raises for workers in the US are expected to rebound in 2010 but salary increments for 2009 remain at 2%.
Conducted in May, the Watson Wyatt 2009/2010 US Strategic Rewards report which includes responses from 235 large US companies shows that companies are projecting median merit increases of 3% for 2010. In addition, there will be fewer companies eliminating pay raises in 2010 with only 10% planning to do so, compared to 25% this year.
But in the meantime, US employees can only expect a median merit pay increase of 2% this year. This is a contrast from the projected figure of 3.5% companies had given when polled prior to the economic crisis in 2008. "This has been a very difficult year for both employers and their workers," says Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. "But employers plan to give larger raises next year, and many plan to reinstate previously-cut pay raises as planning for an eventual economic recovery continues."
The survey also shows that companies are giving smaller raises to workers who do not meet performance expectations. In 2009, workers who "partially met expectations" receive median merit increases of 0.2%, a sharp drop from 1.5% in 2008. Employees who "exceed expectations" this year will receive a 3.1% increase, while those who "far exceed expectations" will receive a 4% increase.
"With companies operating on limited budgets, employees can expect their performance on the job to come under increased scrutiny," says Laurie Bienstock, US director of strategic rewards consulting at Watson Wyatt. She adds that workers who do not meet expectations will see their pay raises cut or even eliminated.
In addition, the survey also notes that funding for annual incentive awards has dropped from 99% in 2007 to 82% in 2008. In 2009, annual incentive awards are expected to be funded at 75%. Bonuses may be a casualty of the recession, says Sejen, but "it remains crucial for employers to find ways to reward top-performing workers for their role in contributing to the company's bottom line".
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