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Employer Action Code: Monitor

Employers keeping pay raises steady next year

• Merit pay increases will average 3.5 percent next year, identical to the increase workers received this year and just slightly lower than the 3.6 percent average increase in 2007.
• Companies plan to provide larger raises to their better-performing employees. Employees whose performance ratings exceed expectations will receive an average merit increase of 4.4 percent, while those who far exceed expectations will receive nearly a 6 percent increase.
• A third of survey respondents have not made contingency plans for future economic downturns. But, two out of three U.S. employers have at least one formal contingency planning activity in place.
• The most common contingency plan is layoffs (52 percent), followed by plans to restructure their organization (46 percent), freeze the hiring of additional workers (39 percent), give smaller pay raises (27 percent) and freeze salaries (13 percent).

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July, 2008

The information included in this report is general information only and should not be relied upon without further review by the appropriate professional advisers. Watson Wyatt is not a law firm or an accounting firm and is not engaged in providing legal, accounting or tax services or advice.