92% of Workers Can Expect Pay Raises This Year

WorldatWork Survey Says: 92% of Workers Can Expect Pay Raises This Year Average salary budget increase in U.S. and Canada is 3.8%

Salary budgets are on the rebound. After seeing pay increase budgets sink to historic lows in 2003 and 2004, participating organizations in the 33rd annual WorldatWork Salary Budget Survey are reporting an actual average increase of 3.8 percent for all employee categories for 2006, and are projecting 3.9 percent for 2007 (up from 3.7 percent in 2005). The increase for 2006 is slightly above the Consumer Price Index (CPI) of 3.5 percent.

The actual salary structure increases in 2006 average 2.6 percent across all employee categories. For the first time in five years, salary structure increases in 2006 met the projections made the previous year, and delivered significant actual increases from the 2005 average of 2.2 percent.

ìHR directors use salary budgets the way realtors use comps to make pricing decisions,î said Don Lindner, CCP, compensation practice leader for WorldatWork. ìThey rely on this benchmark data to establish, communicate and sometimes defend pay decisions.î

Key findings from the WorldatWork survey include:

- Actual total base salary budget increases across all sectors for 2006 average 3.8 percent. This is right on target with projected 2006 figures reported last year.

- Projected base salary budget increases across all sectors for 2007 average 3.9 percent.

- The Public Administration sector shows the highest average budgeted increase for 2006 of 4.0 percent, after experiencing the smallest increases in salary budgets from 2002 to 2004.

- By organization size, companies with fewer than 499 employees had the highest salary budget increases at 4.2 percent.

- Among major metropolitan areas, organizations in Washington, DC report the highest 2006 salary budget increases for all employee categories and industries at 4.0 percent.

The WorldatWork annual survey is the largest and most comprehensive salary budget survey, with nearly 2,800 participants from Americaís largest corporations representing 15 million workers. The survey, conducted in April 2006, consists of responses from human resources professionals in the United States and Canada, categorized by Officers/Executives, Exempt Salaried, Nonexempt Salaried, and Nonexempt Hourly Nonunion across all industries, organization size, major metropolitan areas, and regions.

For the second consecutive year, participating organizations are reporting that 92 percent of employees are expected to receive an increase in base pay this year. Base pay increases may come from general or cost of living increases, merit increases or other increases (promotional increases are excluded).

The WorldatWork Salary Budget Survey is 33 years old. Some notable trends that emerged from this yearís survey include:

-1981 was the highest year for pay raises in the U.S. and Canada, at 10.5 percent. -Organizations expect to come under renewed pressure to retain key talent this year. Respondents report using special programs to attract and retain employees, including: sign-on/hiring bonus (69 percent), spot bonus (45 percent), retention bonus (35 percent), and part-time employment with benefits (28 percent), among others. -A rising number of organizations are using variable pay programs, also known as performance-based pay (excluding sales force incentives); 79 percent of organizations report using variable pay, up from 66 percent in 2001. -Lump-sum increases are most prevalent for exempt salaried employees and least prevalent for officers and executives. A lump-sum increase is defined as an increase in pay that is made in the form of a single cash payment.