Despite the fact that the economy has been humming along, workers just aren't going to see much benefit from it.
That's according to an HRDive report, which says that pay increases will pretty much stagnate over the next year. This discouraging news comes from a new Aon research study that projects increases in base pay at just 3.0 percent in 2018, up just a hair from 2.9 percent in 2017.
Workers who don't stand out from the crowd as high performers might be getting even less in times to come, with more than two thirds of employer survey respondents saying that they're taking some type of action to increase merit pay differentiation in 2018. While 40 percent indicate that they're reducing or eliminating increases for lesser performers, 18 percent say they're using a more aggressive, highly leveraged merit increase grid and 15 percent are setting more aggressive performance targets.
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Aon's projections come amid other reports indicating a strengthening economy and optimistic job numbers; that highlights companies' pressure to focus on results and efficiency. Workers who expect to receive sizable performance-based bonuses next year will be equally disappointed; employers plan to spend only 12.5 percent of payroll on bonuses. And that's the lowest increase since 2010. Only high performers can expect to receive significant raises next year, Aon reports.
Variable pay budgets by industry fluxuate widely, the report points out, ranging from 19.3 percent in the pharmaceutical industry and 16.4 percent in banking/finance to 5.3 percent for workers in the health care/medical services field. And some cities will see higher salary increases than others, as well as some higher-than-average increases in variable pay — with the latter including Houston (14.7 percent), New York City (14 percent) and Philadelphia (13 percent).
HRDive adds that other studies, including one by Willis Towers Watson, indicate similar pay increase projections into 2018, at an average of 3 percent. Only managers and high performers, it adds, can expect to see raises at higher percentages.
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