Pay Trends for 2010

Having struggled with cost-containment challenges during 2009, which resulted in workforce reductions and salary freezes, more U.S. organizations are planning to grant pay increases in 2010 as the economy begins to show signs of improvement.

According to Mercer’s 2009/2010 U.S. Compensation Planning Survey Update, while challenging economic conditions drove 30 percent of employers to freeze salaries across the board in 2009, just 14 percent were planning across-the-board freezes in 2010.

Of those employers granting base pay increases, the average increase is expected to be 2.7 percent in 2010, down from an actual 3.2 percent in 2009, and slightly less optimistic than the increases planned earlier this year for 2010. Including salary freezes, average base pay increases for 2010 are projected to be 2.3 percent. Mercer’s most recent survey on pay trends was conducted in November 2009 and includes responses from more than 350 mid-size and large employers across the U.S. It provides an update to Mercer's 2009/2010 US Compensation Planning Survey from earlier in 2009.

“While planned 2010 base increases have dropped a bit from employers’ projections in April and are less than 2009 increases, this is still positive news given the fewer firm-wide pay freezes and staff reductions planned now compared to this time last year,” says Loree Griffith, a principal with Mercer’s rewards consulting business.

As companies prepare for an economic recovery, she notes, they are focusing on retaining employees and engaging top talent.

“Employers are still juggling selective hiring with selective cuts in staff as they evaluate specific workforce needs,” Griffith says. “Recognition programs, career development, training opportunities and creative communication campaigns—efforts that help keep employees engaged and motivated—along with incentive pay strategies will give companies a competitive edge as business begins to improve.”