Employees in United States, Europe to See Lesser Increases in 2008
WASHINGTON, Sept. 25, 2007 – Merit pay increases for employees in
Asia-Pacific and Latin America will continue to top those of U.S. and
European workers, according to a soon-to-be-published report by Watson
Wyatt Worldwide, a leading global consulting firm, and WorldatWork, the
association for human resource professionals.
The global survey of 946 companies found that while employees worldwide can
expect to see about the same levels of merit pay they are receiving in
2007, employees in quickly developing regions will receive a higher
percentage. Merit-based pay is expected to increase 5 percent in
Asia-Pacific, 4.5 percent in Latin America, 3.6 percent in the United
States and 3 percent in Europe next year, for a global median of 4 percent.
Merit Pay Increase (%) Budgets by Region
Asia-Pacific
Europe
Latin America
United States
Global Median
2007 Merit Pay
5.0
3.0
4.5
3.6
3.9
2008 Merit Pay (projected)
5.0
3.0
4.5
3.6
4.0
“With such a competitive global market for talent, it’s hard to foresee
downward pressure on pay levels coming anytime soon,” said Laura Sejen,
Watson Wyatt global director of Strategic Rewards. “The challenge to
attract and retain skilled workers remains especially acute in Asia-Pacific
and Latin America, where rapid economic growth, high turnover and the
expectation of frequent promotion keep pushing up compensation.”
Reflecting tight labor markets, employers are setting aside separate money
for market adjustments. Employers in Asia-Pacific are budgeting the most
for market adjustments at 3 percent, while employers in Latin America are
setting aside 2 percent. In Europe, market adjustment budgets of 2 percent
are anticipated, and in the United States, budgets will remain at less than
1 percent — a projected 0.7 percent in 2008.
However, throughout the world, companies are focusing more on rewarding
high performers with bonuses than on increasing base pay through merit
increases or market adjustments. Employers around the world are increasing
the number of workers eligible for variable incentives, but at the same
time, goals are getting harder to reach. More than half (51 percent) of
companies anticipate raising their financial targets in the coming year.
Twenty-four percent of employers in Asia-Pacific, 18 percent in Latin
America and 17 percent in Europe report increasing eligibility for
employees for short-term incentives. In the United States, 10 percent
report increasing eligibility.
“Pay is just one part of the total rewards package,” said Don B. Lindner,
global rewards practice leader at WorldatWork. “To attract and retain top
performers, companies need to move toward a holistic, total rewards
approach to managing compensation, benefits, work-life and career
development programs.”
The full report will be published in October.
About Watson Wyatt Worldwide
Watson Wyatt (NYSE: WW) is the trusted business partner to the world’s
leading organizations on people and financial issues. The firm’s global
services include: managing the cost and effectiveness of employee benefit
programs; developing attraction, retention and reward strategies; advising
pension plan sponsors and other institutions on optimal investment
strategies; providing strategic and financial advice to insurance and
financial services companies; and delivering related technology,
outsourcing and data services. Watson Wyatt has 7,000 associates in 31
countries and is located on the Web at www.watsonwyatt.com.
About WorldatWork
WorldatWork (www.worldatwork.org) is an international association of human
resource professionals and business leaders focused on attracting,
motivating and retaining employees. Founded in 1955, WorldatWork provides
practitioners with knowledge leadership to effectively design and implement
strategies and practices in total rewards — compensation, benefits,
work-life, performance and recognition, development and career
opportunities. WorldatWork supports its 30,000 members and customers in 75
countries with thought leadership, education, publications, research and
certification.
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