Employers expecting average employee raises of 3.4 percent this year: survey

Employers are expecting employee pay to rise by an average of 3.4 percent in 2022, according to a Willis Towers Watson survey.

The survey of 1,004 U.S. companies from October to November found companies budgeted for a 3.4 percent raise, up from the average 3 percent increase employers expected to give in 2022 in June of last year. 

The expected uptick comes as employers face a competitive market for workers.

Seventy-four percent said the tight labor market was the reason for the increase, 34 percent said they had better financial results at the end of 2021 than expected and 31 percent cited inflation. 

The five industries expected to see the largest salary increases compared to 2021 are retail, finance, life and health insurance, energy and industrial manufacturing. 

“There’s a great reprioritization of work, rewards and careers under way, and it’s putting significant pressure on compensation programs for many employers,” said Catherine Hartmann, North America Rewards practice leader for the company.

“As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. For instance, as a result of recognizing that labor shortages, and not inflation, are the primary driver of growing salary budgets, many employers are targeting certain segments such as hourly workers, digital talent and workers with in-demand skills to receive higher pay,” Hartmann added.