Pay Increases Are Anticipated In 2023 Despite A Challenging Labor Market And Rising Prices.

Companies are planning an average overall increase of 4.1 percent for 2023, according to WTW’s Salary Budget and Planning Report, which will lead to pay increases.

Salary budgets are anticipated to rise in 2023, which is excellent news for people looking for work or battling with debilitatingly high inflation rates. According to WTW’s Salary Budget and Planning Report, businesses are planning an average increase of 4.1 percent for 2023, up from the average actual increase of 4.0 percent in 2022. These are the highest increases since 2008.

According to Hatti Johansson, research director, Rewards Data Intelligence at WTW, “compounding economic conditions and new ways of working are leading firms to regularly examine their compensation budgets to remain competitive.” “In such a dynamic environment, it is essential for businesses to not only have a well defined compensation strategy but also to have a great awareness and appreciation of the factors that impact compensation growth,” says the author.

According to nearly three out of four respondents (73 percent), worries about a tighter labor market are the key reason for the increased expenditures. Additionally, 28 percent of respondents wish to change their budgets in anticipation of greater financial results, and 46 percent of respondents mention employee expectations for bigger rises that are motivated by inflation.

Organizations continue to face difficulties with recruitment and retention, according to the international consultancy firm, however fewer respondents anticipate that these issues will remain unchanged in the upcoming year. 94 percent of companies are having trouble finding talent this year, but only 40 percent anticipate difficulty in 2023. Similar to this, 89 percent of businesses report having trouble keeping employees this year, but that figure is predicted to fall to just under 60 percent the next year.

Companies are increasingly exploring for non-cash methods of luring and keeping personnel. For instance, 69 percent of respondents have expanded workplace flexibility, and 19 percent either expect to do so soon or are already thinking about it. Six out of ten respondents (59%) have given diversity, equality, and inclusion (DE&I) more of a focus, and 24 percent want to or are contemplating doing so in the next years. Additionally, over 21% of businesses plan to or are considering doing so in the upcoming few years, while 49% of businesses continue to improve recruitment offers with sign-on incentives and equity/long-term incentive awards.

Work, Rewards & Careers with WTW global practice head Catherine Hartmann says, “Organizations need to grow more innovative to solve attraction and retention difficulties as a potential recession looms, sustained rising inflation and employers grapple with talent supply challenges.

Source: https://www.benefitspro.com/2022/07/22/pay-raises-expected-in-2023-amid-tight-labor-market-and-inflation/