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Benefits June 23, 2003
Conference Board: Salary Budgets At 3.5% in 2003
June 23, 2003 (PLANSPONSOR.com) - Salary increase
budgets are averaging 3.5% for 2003, the first time in 10
years these budgets have declined significantly below the 4%
mark.
Reported by Eric Hazard
The decrease from 4% salary budgets in 2002 touched virtually all industries and all three employee groups: nonexempt, exempt and executive. The only exception was the insurance industry, which is at or near 4% for all employee groups in 2003, the same as 2002, according to a report by the Conference Board.
Going forward, salary budgets seem intent on remaining low in the foreseeable future, with the Conference Board projecting sub-4% budgets across virtually all industries and employee groups in 2004. Again the only exception is the insurance group the one with the steady 4% budgets in both years.
To combat this, some companies have taken actions which have the effect of reducing the amount spent for salary increases and are not reflected in the size of the budget. These actions include:
- delayed merit increases
- hiring freezes
- furloughs
- layoffs.
However, inflation is running almost a point less than salary increase budgets. The Conference Board currently projects a 2.6% rise in the Consumer Price Index for 2003 compared with a 3.5% average salary budget. The 2.7%-inflation increase projected for 2004 maintains this differential.