Pay raises next year won't be much, Towers predicts

U.S. companies may give salaried workers who aren't executives an average pay increase of 2.8 percent next year, according to a survey by Towers Watson & Co. Those employees received pay increases of 2.6 percent on average in 2010 and 2011, said the survey of 773 companies released today by the New York-based benefits consultant. Executives also are projected to get salary increases of 2.8 percent in 2012. The average rate of inflation this year through July was 2.9 percent, according to data compiled by Bloomberg. Nonexecutive employees who are the highest performers may receive median salary increases of 4.5 percent for 2011 performance, said a separate survey of 316 firms in North America by Towers Watson. That report found that companies' average projected bonus funding for current-year performance is 101 percent of the target, marking the second consecutive year that companies are able to fully fund their annual bonuses. “Companies are continuing to be very cautious in terms of adding costs to their payrolls,” Laura Sejen, rewards global practice leader at Towers Watson, said in a telephone interview before the report was released. “If they think they'll have a good year, they're fully funding the bonus pool and saying ‘that's how we're going to get cash in the pockets of employees, not by locking ourselves into payroll increases.'” Firms also aren't giving employees bigger increases because of the high levels of unemployment and low levels of difficulty in attracting new employees, Sejen said. The national unemployment rate was 9.1 percent in July and has averaged 9 percent this year, Labor Department figures show.