Salary Increases Weak, but High Performers Still Rewarded

U.S. employees will get pay raises averaging 3 percent this year, dismal by historical standards. Around the world, pay’s getting chopped hard, but increases are still bigger than in the U.S. In the Asia-Pacific region, for example, raises will be reduced by an average of 1.7 percent, but that still leaves them at 5.2 percent. They’re being cut in Latin America, but people are still going to get double-digit raises, on average.

Hewitt Associates studied more than 2,000 companies representing more than 25 million employees in 40 countries at the end of 2008, and found them responding the following way to the weak economy:

Asia-Pacific Europe Latin America U.S.
Cuts to Salary Increases 58% 67% 63% 50%
Hiring freezes 42% 63% 66% 39%
Pay freezes 6% 20% 23% 10%
Layoffs 19% 69% 33% 35%
Salary cuts – execs
Salary cuts – all employees
4%
2%
9%
0%
9%
0%
1%
1%
Increasing time between increases 12% 29% 22% 0%
Reducing promotions 28% 28% 23% 17%

Hewitt reports that “two-thirds of companies (66 percent) in Latin America, 62 percent of companies in Europe, and more than half (59 percent) of companies in Asia-Pacific are setting aside a separate pool of money to reward high performers.” In the U.S., 18 percent are offering retention bonuses to high performers, and in Latin America, 16 percent are.