US Compensation Planning Survey Update, which was conducted in November and
includes responses from more than 350 mid-size and large employers across the U.S.,
found the number of organizations freezing salaries has declined compared to
last year, according to a news release. While challenging economic conditions
drove 30% of employers to freeze salaries across the board in 2009, just 14%
are planning across-the-board freezes in 2010.
Of those employers granting base pay increases, the average
increase is expected to be 2.7% in 2010, down from an actual 3.2% in 2009 and slightly
less optimistic than the increases planned earlier this year for 2010. Including
salary freezes, average base pay increases for 2010 are projected to be 2.3%.
Consistent with base pay increases, Mercer’s survey shows
that short-term incentive payouts are projected to decrease slightly in 2010. On
the whole, average payouts as a percentage of base pay for all employee groups
are reasonably stable, the news release said.
In addition, differentiation of short-term incentive awards
continues to vary by performance levels, with the highest-performing employees projected
to receive average payouts (as a percentage of base pay) of two to four times
more than the lowest-performers.
Mercer found industry variations in pay trends. While 20%
of durable goods manufacturers and 18% of services firms are expected to
maintain pay freezes in 2010, less than 5% of consumer goods and insurance
firms are expected to have freezes.
Compared to the expected average pay increase of 2.7% in
2010, employers within the consumer goods and high-tech industries have the
highest projected pay increase at 3%. In contrast, other industries expect to
award less than average pay increases in 2010, including education (2.2%) and health
and medical insurance (2.4%).