Look for smaller raises, same bonuses this year
A December survey by Hewitt Associates shows employers are planning to boost base salaries by less than 3% this year, the lowest average increase since the consulting firm began tracking the data in 1976.
The rapidly deteriorating economy forced half of the 640 major employers surveyed to reduce the raises they'd expected to give since Hewitt's previous poll in July 2008. Another quarter of employers were considering whether to do so.
For companies scaling back:
- Salaried, exempt employees will receive an average salary increase of 2.5% in 2009, down from an expected 3.8% in July.
- Executive employees will receive 2.2%, down from a projected 3.8% in July.
- Salaried, nonexempt pay will receive 2.6%, down from an expected 3.7% in July.
The companies in Hewitt's survey also trimmed the amount they plan to spend on what's called variable pay -- bonuses, profit-sharing, leisure trips and other performance-based rewards that are used to recognize their most productive workers.
But the reductions were relatively small, and Hewitt concluded that "companies remain focused on attracting and retaining key employees by reserving a significant portion of their compensation budgets for variable-pay bonuses, or performance-based rewards that must be re-earned each year."
This is just another indication of how serious the current recession has become. The economy lost 2.6 million jobs in 2008, and everyone needs to be prepared for the worst -- a pay cut or layoff that could dramatically reduce your income.
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