Here's a sign the economy might be getting a little better: Pay increase budgets remained steady at 2.8 percent this year, according to the 2011 Compensation Data Insurance survey released today. And better yet, budgets are projected to increase slightly in 2012 to 3 percent.
From 2008 to 2010, pay increase budgets fell one percent, going from 3.8 percent in 2008 to 2.8 percent in 2010.
"There appears to be a level of cautious optimism within the industry in regard to the economy," says Amy Kaminski, director of marketing for Compdata Surveys, the pay and benefit survey data provider.
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Companies use pay increase budgets to make a number of different increases to their employees' salaries. More than 72 percent of insurance organizations are allocating a portion of their budget to make market adjustments. Just over 45 percent are offering merit increases, while 14.2 percent are making cost of living increases. Only 13.2 percent of survey respondents are utilizing their pay increase budget for promotional increases.
But the bad news for employees is it might take a while for them to start seeing more earnings.
"Although pay increases play an important role in rewarding top performers, employers are likely to take a more conservative approach to increasing pay until the economy significantly improves," Kaminski says. "With pay increase budgets expected to make only a gradual increase over the next few years, employers will have to come up with new and creative ways to reward employees in the meantime."
The rate at which these increases are used varies by industry, the survey shows. Merit increases, for example, are being offered by carriers at a rate of 49.6 percent, while 36.2 percent of agents, brokers and service providers are using them. The average merit increase budget reported in 2011 was 2.7 percent, with insurance companies projecting them to increase to 2.9 percent in 2012.
Compensation Data 2011 Insurance surveyed more than 100 industry-specific job titles and 350 benchmark titles ranging from entry-level to top executives. Data was collected from 210 insurance employers reporting on nearly 1,750 locations across the country.
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