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Global Rise in Salary Increase Budgets Projected in 2012
 

By Culpepper and Associates Inc.  9/12/2011
 

Results from the 2011-2012 Culpepper Salary Budget Survey reveal that salary budgets are projected to rise again in 2012. However, the pace of salary increases is projected to slow in 2012, as companies adjust their budgets to a slowing and uncertain economic recovery.

As companies adapt to a new normal of volatile financial markets, smaller salary increase budgets, and increased global competition for talent, it is critical that they allocate salary increases wisely and in the right places. One-size-fits-all, across-the-board salary increases or freezes should be avoided. It is important to consider differences by country, industry sector, type of job and employee performance.

Below are highlighted results from the 2011-2012 Culpepper Salary Budget Survey. It includes salary budget data from 1,065 participating organizations with employees across 95 countries and 24 international geographic regions. The survey was conducted from June 21, 2011, through August 24, 2011.

Key Findings and Trends

Annual salary reviews most common. Most organizations review base salaries annually on a common focal date.

Global salary increase budgets rise. Average global base salary increase budgets across all jobs and locations are projected to rise from 3.26 percent in 2011 to 3.39 percent in 2012.

Technology sectors lead the way. Base salary increases in clean tech & alternative energy, semiconductor, and Internet/digital content & services sectors are projected to outpace other sectors in 2012.

Fewer companies freezing salaries. The number of companies freezing salaries across all jobs and locations is projected to decline from 4.4 percent in 2011 to 2.9 percent in 2012.

U.S. salary increases. Base salary increases in the U.S. are projected to rise from 2.92 percent in 2011 to 3.01 percent in 2012, with most companies budgeting 3.0 percent in 2012.

Canada salary increases. Base salary increases in Canada are projected to rise from 2.76 percent in 2011 to 2.94 percent in 2012, with most companies budgeting 3.0 percent in 2012.

Paying for performance. Most companies in the U.S. and Canada are budgeting salary increases of 5.0 percent for high-performing employees, 3.0 percent for average-performing employees and no increases for low-performing employees.

Global regions with the highest salary increases. Base salary increases in South Asia, South America, the former Soviet Republics (i.e., Commonwealth of Independent States), and Africa are higher and more volatile than other regions of the world.

Global regions with the lowest salary increases. Base salary increases in the Eurozone (€), member states of European Free Trade Association (EFTA), and Northern America (i.e., United States and Canada) are lower and more stable than other regions of the world.

Recent Trends

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.

Since bottoming out in 2009, base salary budgets steadily climbed for two years and are projected to rise slightly in 2012.

Global Overview of Base Salary Increases

Table 1 provides aggregated average base salary increases for 2011 and 2012 for major geographic regions throughout the world.

Note: See bottom of page for footnotes and a list of countries included in each geographic region.

Table 2 provides aggregated average global base salary increases for 2011 and 2012 by industry sector.

Data source: 2011-2012 Culpepper Salary Budget Survey of 1,065 participating organizations.

Survey dates: June 21, 2011 through August 24, 2011.

Participants by sector: Technology 38.4 percent; life sciences 10.7 percent; health care 9.0 percent; manufacturing 12.2 percent; financial services 4.9 percent; retail and distribution 4.8 percent; energy and utilities 3.6 percent; engineering/construction/architecture 2.9 percent; business services 2.5 percent; transportation/logistics services 2.3 percent; insurance 2.3 percent; media and publishing 1.9 percent; other 4.5 percent .

Participants by number of employees: Up to 100: 18.5 percent; 101 to 500: 19.3 percent; 501 to 2,500: 25.1 percent; 2,501 to 10,000: 23.2 percent; Over 10,000: 13.9 percent.

Participants by ownership/corporate status: Public 40.6 percent; private 44.5 percent; nonprofit 13.1 percent; other 1.8 percent.

The base salary increase data in this report includes COLA (cost of living adjustments), merit increases, mandatory increases required by government statutes and union contracts, and other non-merit increases. It excludes promotional increases.

Footnotes for Geographic Regions:

[1] Mexico & Central America includes data collected for the following countries and territories: Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua and Panama.

[2] Caribbean & West Indies includes data collected for the following countries and territories: Dominican Republic, Puerto Rico, Trinidad & Tobago, and other Caribbean islands and territories.

[3] South America includes data collected for the following countries: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Uruguay and Venezuela.

[4] European Union includes data collected for 27 member states in the European Union. The European Union breakout is a combination of Eurozone (€) and Non-Eurozone.

[5] Eurozone includes data collected for 17 member states in the European Union that have adopted the euro (€) as their official currency: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain.

[6] Non-Eurozone includes data collected for 10 member states in the European Union that have not adopted the euro (€) as their official currency: Bulgaria, Czech Republic, Denmark, Hungary, Latvia, Lithuania, Poland, Romania, Sweden and the United Kingdom.

[7] Non-European Union includes data collected for the following countries in Europe that are not in the European Union: Armenia, Azerbaijan, Belarus, Bosnia & Herzegovina, Croatia, Georgia, Iceland, Kazakhstan, Kyrgyzstan, Liechtenstein, Macedonia, Moldova, Norway, Russia, Serbia, Switzerland, Tajikistan, Turkey, Turkmenistan, Ukraine and Uzbekistan.

[8] European Free Trade Association (EFTA) is a subset of Non-European Union and includes data collected for the following four member states: Iceland, Liechtenstein, Norway and Switzerland.

[9] Commonwealth of Independent States is a subset of Non-European Union and includes data collected for the following former Soviet Republics: Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.

[10] Middle East includes data collected for the following countries: Bahrain, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, United Arab Emirates and Yemen. (Iran and Syria were not included in the survey).

[11] North Africa includes data collected for the following countries: Algeria, Egypt, Morocco and Tunisia. (Libya, Sudan and Western Sahara were not included in the survey).

[12] Sub-Saharan Africa includes data collected for the following countries: Ghana, Kenya, Mauritius, Mozambique, Nigeria, Senegal, South Africa, Tanzania and Zimbabwe.

[13] South Asia is a subset of Asia and includes data collected for the following countries: Bangladesh, India, Pakistan and Sri Lanka.

[14] East Asia is a subset of Asia and includes data collected for the following countries: China, Hong Kong, Japan, South Korea and Taiwan.

[15] Southeast Asia is a subset of Asia and includes data collected for the following countries: Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.

[16] Pacific includes data collected data for the following countries and territories: Australia, New Zealand, and other Oceania Islands & Territories.

Reposted with permission from 2011-2012 Culpepper Salary Budget Survey, September 2011, www.culpepper.com.

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

Related Articles:

Salary Increases Stay Consistent, with Focus on Variable Pay, SHRM Online Compensation Discipline, September 2011

Moderated Pay Raises Foreseen, with Fully Funded Annual Bonuses, SHRM Online Compensation Discipline, August 2011

Salary Budgets Lag Behind U.S. Rate of Inflation, SHRM Online Benefits Discipline, August 2011

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