Good News for Workers: Base Pay to Rise in 2013
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The Fiscal Times
August 2, 2012

It will come as good news to a lot of long-suffering employees who haven’t seen raises in oh, a bunch of blue moons, that more than 95 percent of organizations say they’ll give their workers salary increases next year.

The average raise in base pay is expected to be 2.9 percent in 2013. That’s up slightly from 2.7 percent this year and last year, 2.3 percent in 2010, and 2.1 percent in 2009.

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Mercer, a human resources consulting firm, reported its findings Wednesday. The company, which has been doing its annual survey for more than 20 years, reached out to more than 1,500 mid-sized and large employers across the country. It conducts a follow-up survey in the fall to see whether anything’s changed, especially given today’s mixed economic signals.   

“This is a great thing for employees, because salary freezes and salary reductions seem to be – for now – a thing of the past,” Catherine Hartmann, principal with Mercer’s Rewards consulting business, told The Fiscal Times on Wednesday. “Ninety-five percent of employers are providing salary increases both this year and next year. But what we’re also seeing is that in order to get increases at the 3 percent level and beyond, employees really need to be top performers and to be in key and critical skill-set areas.”

Top performers make up about 8 percent of the workforce, according to Mercer, and those individuals should see higher salary increases than the average, as “companies strive to balance their compensation planning budgets with the retention of critical talent.”

Hartmann sees a new trend of companies looking inward – assessing what motivates their employees and where top performers are choosing to work. “Many clients are still conservative about hiring, so they’re focusing on the people they currently employ,” she says. “Companies are asking themselves: ‘How do we become an employer of choice for key workers who are going to help drive our growth?’”

According to the Mercer survey, the highest-performing employees received average base pay increases of 4.4 percent in 2012, compared to 2.4 percent for average performers (54 percent of the workforce). The top three factors that drive compensation decisions are: the need to retain talent (according to 74 percent of respondents); the need to strengthen a performance-based culture (66 percent of respondents); and the need to acquire talent (57 percent). Seventy-three percent of the companies who responded to the Mercer survey employ 1,000 people or more – with 63 percent of them reporting annual revenue of at least $1 billion.

Still, after so many years of witnessing cutbacks, downsizing and belt tightening, some workers remain skeptical that they’ll see a raise in their paycheck any time soon. “I worked for five years for the same company and received just one raise in all that time,” says a 20-something web producer. “So I would be surprised to see a raise – though it would be nice.”

Managing Editor Maureen Mackey oversees scheduling and work flow and also writes and edits features and reports on a wide array of subjects. She spent more than 20 years as a senior book and features editor at Reader’s Digest.