More than 40 percent of employers
are scaling back their 2004 pay-increase budgets for at least some portion of
their employee population, according to a new survey from Mercer Human Resource
Consulting. At these organizations, pay increases originally budgeted for an
average of 3.6 percent now will average about 3.2 percent.
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Get Your Report Now! Thirteen percent said they had reduced their pay-increase budgets as a result
of healthcare cost increases, pension funding requirements, or a combination
of the two factors. Another 13 percent were considering this course of action
as a result of one factor or both factors.
"We are still seeing a great deal of caution as employers approach the
end of the year and finalize their pay-increase budgets," says Steven E.
Gross of Mercer. "In fact, a small number of employers still have budgeted
no pay increases for at least some of their employees in 2004, indicating that
they can’t afford pay increases– especially in concert with rapidly
rising health care costs and pension funding requirements."
Mercer's
survey found that the strongest performers will receive average pay increases
of 4.8 percent in 2004, compared to 3.1 percent for average performers, and
1.0 percent to the weakest performers.