Banner year? In 2023, 68% of employers will increase salaries
With an average projected wage increase of 3.9%, employers are shifting focus toward employee well-being and taking a total rewards approach by adding benefits, says a new study.
Perhaps it’s due to a tight labor market, or high inflation, or the goodness of their hearts, but a new survey from the International Foundation of Employee Benefit Plans reveals that 68% of employers are planning salary increases for 2023 for all workers.
The remaining 17% of employers reported an increase for certain classes of workers and 13% haven’t decided. The final 2% said they aren’t planning an increase. The average projected salary increase is 3.9%.
“While signs are the ‘Great Resignation’ and quiet quitting are subsiding, companies are still faced with talent acquisition and retention challenges,” said Julie Stich, the Vice President, Content, at the International Foundation of Employee Benefit Plans.
Factors at play to determine salary increases include performance measures (57%), job level (44%), collective bargaining status (35%), employee classification (35%), department (26%), full-time/part-time status (22%), and service time (17%).
Related: How much salaries will increase (or decrease) globally in 2023
Employers, however, are also examining benefits and compensation as a whole, taking a total rewards approach. Employers are planning the following changes for 2023:
- Employee wellbeing (e.g., wellness/mental health/financial): 66%
- Work culture and work/life benefits (e.g., DEI, community service, child/elder care, flexible work options): 57%
- Learning and development (e.g., manager/skill-based training, educational assistance, student loan repayment): 48%
- Health care benefits: 35%
- Retention (e.g., service awards, recognition, phased retirement): 34%
- Paid leave (e.g., vacation, holidays, sick leave, parental, maternity, adoption, family, sabbaticals): 32%
- At-work perks (e.g., casual dress code, transportation benefits, fitness, childcare, clinics): 27%
- Incentive pay (e.g., year-end/sign-on/performance/discretionary/retention bonuses, profit-sharing, stock options): 24%
- Retirement benefits (e.g., defined contribution, defined benefit, deferred compensation): 24%
- Voluntary (employee-pay-all) benefits:15%
“With the often still-slow pace of finding new staff to replace those who left, employees continue to experience the effects of increased workloads and burnout,” adds Stich. “The question is: how to keep them engaged and committed? Employers need to look at the mix of employee benefits they offer. Benefits designed for the long-term, like retirement plans, won’t have the desired retention effect on younger employees experiencing burnout. Employers need to keep their total rewards offerings competitive, while also shifting their focus to the immediate. Company culture and well-being offerings, for example, are having an immediate and significant impact.”