2009 Pay Raises not Affected by Economic Slump

July 23, 2008 (PLANSPONSOR.com) - Results of a forthcoming survey from Watson Wyatt Worldwide indicate U.S. companies are planning to keep pay raises steady next year despite the economic slump.

According to a press release, the survey found that U.S. employers are planning to give workers merit increases that will average 3.5% in 2009, the same as workers received this year. Companies also say they plan to provide larger raises to their better-performing employees, with employees whose performance ratings exceed expectations to receive an average merit increase of 4.2% those who far exceed expectations to receive an average 6% increase.

The survey also found that one-third of companies have not made any workforce contingency plans in the event the economy continues to falter. However, the other two-thirds have at least one formal contingency planning activity in place. Among those with a contingency plan, the most common is layoffs (52%), followed by plans to restructure their organization (46%), freeze the hiring of additional workers (39%), give smaller pay raises (27%), and freeze salaries (13%).

Globally, the press release said, a vast majority of employers in Asia-Pacific, Europe, and Latin America have contingency plans in place. More than eight in 10 employers in Asia-Pacific (84%) and Europe (80%) have established contingency plans, and 70% of Latin American employers have plans. Six in 10 Canadian employers have adopted a contingency plan to be implemented in the event of further economic decline.

Watson Wyatt’s Global Strategic Rewards Survey, to be released later this year, received a total of 1,389 employer responses, including 276 U.S. employers.