2013 Salary Increases: Get Ready For Yet Another Year at 3%

If the tepid employment and job creation numbers weren’t depressing enough, here’s another sign of how sluggish the economy really is: projected 2013 salary increases in the U.S. are only expected to be about 3 percent, according to the 39th annual WorldatWork 2012-2013 Salary Budget Survey.

That’s a tad better than the 2.8 percent actual increase in wages in 2012, but just barely. And, it falls far behind the increases that are projected for workers in economic powerhouses like Brazil, India, and China, where they are expected to be two to three times the size of what is projected for American workers.

According to the WorldatWork salary survey, the projected increases for 2013 break down like this:

  • India — a projected 10.7 percent increase (on top of an actual 11.2 percent hike in 2012);
  • China — 8.8 percent projected hike (was 9.1 percent this year);
  • Brazil — 7.2 percent projected increase (was 7.7 percent in 2012);
  • Singapore — 4.3 percent projected (was 4.3 percent this year);
  • Australia — 4.0 percent projected (was 4.0 percent actual in 2012);
  • Canada — 3.1 percent projected (was 3.0 percent this year);
  • United Kingdom — 3.1 percent projected (was 3.1 percent this year);
  • United States — 3 percent projected (actual in 2012 was 2.8 percent);
  • Spain — 2.9 percent projected (was 2.8 percent this year);
  • Japan — 2.7 percent projected (2.6 percent in 2012).

Increases “on the low end of the global scale”

Yes, as weak as the expected 2013 salary increases are here in the U.S., it could be worse — we could be in Japan.

“Salary budget increases in the United States and Canada, while on the low end of the global scale, have not declined despite continued mixed economic signals,” said Kerry Chou, CCP, compensation practice leader for WorldatWork, in a press release about the survey. “However, it is apparent that employers still view the near term with uncertainty, and as such are not making significant changes to their salary budgets.”

Yes, I suppose it is good news that salary budgets are stable and not dropping anymore, but a projected 3 percent salary hike for next year shows clearly that there is no belief that the economy is going to improve enough in the near term to sustain a larger hike. That’s hard to swallow for American workers who have been through a number of years of pay freezes, wage cuts, furloughs, layoffs, and all manner of workplace cutbacks. And, it is in sharp contrast to what is going on in some of the supercharged developing economies.

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“Salary increases in growth markets such as India, China and Brazil remain strong again this year,” said Adam Sorensen, GRP, global practice leader for WorldatWork. “Although more and more companies are implementing integrated total rewards programs to attract and retain employees, cash remains king among employees. The war for talent — particularly for senior leaders and employees with specialized skills — rages on. Organizations must continue to be competitive in cash compensation even as they expand the range of other rewards in order to attract, motivate and retain their critical talent.”

It could always be worse

The WorldatWork 2012-2013 Salary Budget Survey is the largest survey of its kind with 4,299 responses from 13 countries representing more than 17 million employees. WorldatWork collected survey data in April 2012, and survey respondents are WorldatWork members employed in the HR, compensation and benefits departments of mostly large U.S. companies. The full report will be available in early August at www.worldatwork.org/salarybudgetsurvey.

I’ll dig into the WorldatWork salary survey a little more when the full report is available next month, but it’s clear from these topline numbers that American workers shouldn’t hold their breath waiting for that big salary increase to finally show up in their paycheck. Yes, it seems that we’re in for another year of just plodding along when it comes to job growth and pay.

That’s a version of what I wrote last year, of course, and I’m getting as tired of it as I would a broken record. Still, as bad as it is, it could always be worse, but that’s small consolation if you were counting on that raise next year to help you and your employees finally catch up again.

John Hollon is Editor-at-Large at ERE Media and was the founding Editor of TLNT.com. A longtime newspaper, magazine, and business journal editor, John has deep roots in the talent management space. He's the former Editor of Workforce Management magazine and workforce.com, served as Editor of RecruitingDaily, and was Vice President for Content at HR technology firm Checkster. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices, including for the popular Fistful of Talent blog. Contact him at johnhollon@ere.net, connect with him on LinkedIn, or follow him on Twitter @johnhollon.

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