U.S. bucks salary trend
July 24, 2013 1:07 PM
The gradual increases in the U.S. are good short-term news, but falling pay budgets in every other industrialized country isnt great news for the global economy, on which U.S. economic growth is so dependent, says Kerry Chou, CCP, senior compensation practice leader for WorldatWork.
Heres a look at the state of salaries at home and abroad, who is doing well and who is doing poorly. Mercer says in the U.S. top performers continue to get salary increases nearly twice that of an average performer, so for Americans, at least, pay for performance is alive and well in the annual merit process.
India
With a projected 10.9% pay bump for Indian workers in 2014, the subcontinent may seem a generous place for employees. Not so, WorldatWork says, with Indias annual inflation approaching 10%. This means workers in India are not better off than workers in countries where salary increases are below average but still higher than inflation, Chou says. Workers in the U.S., for example, are experiencing more buying power since the average 2013 salary budget increase is 2.9%, while the annualized inflation rate, as of April 2013 when survey data was collected, was only 1.1%.
Oh Canada
With the exception of the U.S., every country WorldatWork surveyed cut year-over-year pay increases from 2012 to 2013. Americas neighbor to the north saw one of the smallest drops with 3% falling to 2.9%. Next year, Canada is expected to be back on the upswing with 3.1% raises. Will the reality match the surveys numbers?
More BRICs
China and Brazil each saw 0.9% drops in salary between 2012 and last year, among the largest reported. The BRIC nations have two of the fastest growing economies in the world, but also large, at times restless, populations. In their roles as Olympic hosts and major world players, both seek more stability at home.
U.S. spread
As U.S. companies continue to focus on retaining top talent, Mercer says, the best performers will keep seeing the best raises. The highest-performing employees, approximately 7% of the population, saw average pay increases of 4.6% this year, compared to 2.6% for average performers and 0.2% for the lowest performers. Differentiation of salary increases based on performance is now commonplace and remains an effective way for employers to recognize those employees that enhance the companys competitiveness and contribute to its success, says Catherine Hartmann, principal in Mercers rewards consulting business.
Other rewards
In addition to pay, of course, companies are seeking other ways to reward their top assets, including flexible hours, professional development and attending sponsored conferences. They recognize that engaged employees are less likely to seek job opportunities outside of the company, and therefore, have a more positive influence and impact on both team and business performance, explains Hartmann, principal in Mercers rewards consulting business.
