2010 Salary Increase Budget Update: Thaw as Confidence Improves 

 

After the first two months of 2010, worldwide salary budgets for the year had declined slightly from projections reported in September 2009, according to results from the 2010 Culpepper Salary Increase Budget Update Survey. While many companies remained conservative with salary increases, an increasing number reported improved confidence about unfreezing salaries and rolling back salary cuts.

This survey drew on salary increase data collected in January and February 2010 from 765 participating organizations across 86 countries and 17 international geographic regions.

The survey findings reveal that:

• Projected salary increases for 2010 decline slightly. Since September 2009, projected base salary increases for 2010 across all jobs and locations decreased from 2.88 percent to 2.77 percent. Excluding salary freezes, projected base salary increases declined from 3.25 percent to 3.21 percent.

• Fewer companies freeze salaries. The number of companies planning to freeze salaries in 2010 increased slightly from 12 percent to 14 percent. However, this is a marked improvement from 2009, when 37 percent of companies froze salaries.

• Salary freezes thawing more quickly. In September 2009, 51 percent of companies were planning to unfreeze salaries by the end of 2010. Since then, 70 percent of companies have unfrozen salaries or plan to unfreeze salaries in 2010. The share of companies uncertain about when they will unfreeze salaries declined from 45 percent to 30 percent.

• Fewer companies reduce salaries. In 2009, 13 percent of companies reported that they cut salaries. Only 1 percent plan to reduce salaries in 2010.

• Rollback of salary cuts accelerates. In September 2009, 52 percent of companies were planning to reverse salary reductions by the end of 2010. Since then, 73 percent of companies have reversed salary reductions or plan to in 2010. The percent of companies uncertain about when they will reverse salary cuts declined from 40 percent to 27 percent.

• Global salary increases. Average global base salary increases across all jobs and locations are projected to jump from an actual average increase of 1.90 percent in 2009 to 2.77 percent in 2010.

• United States salary increases. Base salary increases in the U.S. are projected to climb from an actual average increase of 1.66 percent in 2009 to 2.47 percent in 2010.

• Canada salary increases. Base salary increases in Canada are projected to rise from an actual average increase of 1.07 percent in 2009 to 2.54 percent in 2010.

• Regions with the lowest base salary increases. Base salary increases in Canada, the U.S. and the Eurozone are lower and less volatile than in other regions.

• Regions with the highest base salary increases. Base salary increases in South America and Africa are higher and more volatile than other regions.

• Global salary range structure increases. Average global salary range structure increases across all jobs and locations are projected to rise from 1.25 percent in 2009 to 1.47 percent in 2010.

• Promotional Increases. Average promotional increases are projected to decline slightly from 7.37 percent in 2009 to 7.32 percent in 2010.

• Timing of base salary reviews. Most organizations review base salaries annually on a common focal date.

• Base pay philosophy. Nearly 70 percent of companies have a base salary philosophy with an objective to match or lead the market and to pay salaries at or above current market levels.

Recent Trends

Salary increase budgets have changed dramatically over the past couple of years. In early September 2008, before the global economic crisis unfolded, average global base salary increases across all jobs and locations exceeded 4 percent (Figure 1), with only 2 percent of companies freezing salaries (Figure 2).

From late 2008 through mid-2009, the number of companies freezing salaries for all employees increased to 37 percent, which drove average base salary increases to historically low levels.

Overall, salary budgets for 2010 have significantly risen compared to 2009. However, a relatively high number of companies plan to freeze salaries in 2010, and average projected base salary increases are still much lower than recent years prior to 2008.

The survey date for each data point is provided in parentheses.
Averages include salary freezes (zeros).

The survey date for each data point is provided in parentheses.

Global Overview of Base Salary Increases

Table 1 provides aggregated average base salary increases for 2009 and 2010 for major geographic regions.

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Culpepper and Associates conducts worldwide salary surveys and provides benchmark data for compensation and employee benefit programs.

Reposted with permission.

Source: 2010 Culpepper Salary Increase Budget Survey, March 2010, www.culpepper.com 

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