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Salary budgets for 2011 are projected to continue rising after hitting historic lows in 2009, according to results from the 2010-2011 Culpepper Salary Budget & Planning Survey.
Despite a weak job market, most companies report improved confidence with their cash compensation budgets. Projected budgets for 2011, including salary increases, promotional increases and variable incentives, are all higher than 2010. Furthermore, the number of companies reporting salary freezes has declined significantly, and salary reductions have nearly disappeared.
The report includes data from 933 organizations in 90 countries.
Key Survey Findings and Trends
• Salary increases rise. Average global base salary increases across all jobs and locations are projected to jump from 2.59 percent in 2010 to 3.14 percent in 2011.
• Salary freezes continue to thaw. The number of companies freezing salaries is projected to decline sharply from 14 percent in 2010 to 4 percent in 2011.
• Very few companies cutting salaries. Only two-tenths of 1 percent of companies plan to cut salaries in 2011.
• U.S. salary increases. Base salary increases in the United States are projected to rise from 2.38 percent in 2010 to 2.91 percent in 2011.
• Canada salary increases. Base salary increases in Canada are projected to rise from 2.26 percent in 2010 to 2.95 percent in 2011.
• Technology, life science and energy sectors lead the way. Base salary increases in technology, life science and energy sectors are projected to outpace other sectors in 2011.
• Global regions with the highest salary increases. Base salary increases in South Asia, South America, Africa and the former Soviet Republics (Commonwealth of Independent States) are higher and more volatile than other regions of the world.
• Global regions with the lowest salary increases. Base salary increases in the United States and Canada, the Eurozone and member states of European Free Trade Association (EFTA) are lower and less volatile than in other regions.
• Salary range structure increases. Average global salary range structure increases across all jobs and locations are projected to rise from 1.41 percent in 2010 to 2.10 percent in 2011.
• Most companies aim to match or lead market pay rates. Nearly 70 percent of companies have a base salary philosophy with an objective to match or lead the market, and they have salaries at or above current market levels.
• Annual salary reviews most common. Most organizations review base salaries annually on a common focal date.
Salary increase budgets have changed dramatically over the past few 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.
Salary budgets for 2010 and 2011 have improved significantly compared to 2009. However, average projected base salary increases for 2011 are still much lower than 2008 levels.