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Raises will be smaller than ever in ’09

Here’s another way the recession is hurting all of us — even those of us who still have a job.

A survey by Hewitt Associates shows employers are planning to boost base salaries by less than 3% this year, the lowest average increase since the consulting firm began tracking the data in 1976.

The rapidly deteriorating economy forced half of the 640 major employers surveyed to reduce the raises they’d expected to give since Hewitt’s previous poll in July 2008. Another quarter of employers were considering whether to do so.

For companies scaling back:

  • Salaried, exempt employees will receive an average salary increase of 2.5% in 2009, down from an expected 3.8% in July.
  • Executive employees will receive 2.2%, down from a projected 3.8% in July.
  • Salaried, nonexempt pay will receive 2.6%, down from an expected 3.7% in July.

The companies in Hewitt’s survey also trimmed the amount they plan to spend on what’s called variable pay — bonuses, profit-sharing, leisure trips and other performance-based rewards that are used to recognize their most productive workers.

But the reductions were relatively small, and Hewitt concluded that “companies remain focused on attracting and retaining key employees by reserving a significant portion of their compensation budgets for variable-pay bonuses, or performance-based rewards that must be re-earned each year.”

Comments (2)
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2 Existing Comments
  1. wageslave said:
    on March 3rd at 12:55 pm

    our company said there will be pay cuts, not raises. I wonder if your article takes that into consideration? there are plenty of companies out there trying to cut costs as much as they can. raises don’t seem relevant at all this year.

  2. Bernz Jayma P. said:
    on March 11th at 03:15 pm

    My wife works as a Bank Executive and earlier this year did not received her bonus and raised this year plus the fact that they were told that they may not get a raised again next year. Hey, times are harder and there are adjustments that need to be made.