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WTW: Despite looming recession, pay raises still on the horizon for 2024

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Employers are budgeting an average salary increase of about 4% next year, WTW said in a report published on June 29. While lower than the 4.4% increase in 2023,“the numbers remain higher than the 3.1% salary increase budget in 2021 and years prior,” researchers noted.

“While we are seeing lower salary increases forecasted for next year, they’re still well above the ones we’ve seen for the past 10 years. This shows that companies are striving to stay competitive in an ever-changing work climate,” WTW’s Research Director of Reward Data Intelligence, Hatti Johansson, said in a statement.  

Regarding the 2023 increase, WTW reported that 70% of companies budgeted pay raises for this year that are either the same or higher than last year. Compare that to only 14% of companies who have budgeted for pay raises to be lower, per WTW data.

This projection by WTW comes amid a wavering U.S. economic climate, where many U.S. companies have been laying off staff and implementing hiring freezes. On July 10, Microsoft announced more layoffs to come following deep cuts earlier this year; a few weeks earlier, Grubhub also recently announced layoffs.

Released mid-June, ManpowerGroup’s employment outlook report suggested that many employers worldwide will be hiring talent in Q3 2023, but less than in previous years. “This data suggests employers are planning more measured hiring for the quarter ahead as they navigate a range of local and macro level challenges — from supply constraints to uneven consumer confidence and rising inflation,” ManpowerGroup chairman and CEO Jonas Prising said in a statement. 

A staffing expert previously told HR Dive that more companies are becoming “cautious” in their hiring. HR discourse surrounding the shift to retention strategies — and developing existing talent — may explain why companies are freezing hiring but still focusing on raises.

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