Workers anticipating merit raises equal to their last may be disappointed in the year ahead as companies look to scale back after years of increases throughout the pandemic, Bloomberg reports.
A survey from Mercer found organizations are projecting 3.5 percent for merit increase budgets and 3.9 percent for total increase budgets in 2024, compared to 3.8 percent and 4.1 percent, respectively, for 2023. Healthcare services is home to the lowest projected merit increase budget at 3.1 percent next year.
A survey of U.S. employers conducted by Aon found a similar trend, with merit raises averaging about 3.7 percent next year across all industries, down from 3.9 percent in 2023.
These projected raises are still higher than pre-pandemic averages, when annual pay gains hovered around 3 percent. That's due to the continued resilience of the labor market and historically low unemployment, Mercer Senior Principal Lauren Mason told Bloomberg, noting that additional cuts may be made to compensation budgets next year as companies adapt to the changing economic landscape.
Salary increases tied to promotions will also slow down next year as companies plan to promote fewer people, Mercer found.