Global Human Capital & Associates


2009 Salary Trends

It’s that time of the year again to start thinking about 2009 salary budgets. For the past 8 years salary increases have been reasonably stable, ranging from 3.5 to 4.0 % per annum. Each year the surveys predicted that salary budget adjustments would remain flat and ahead of the Consumer Price Index.

That was, of course, until the latter half of 2008. With fluctuating energy prices and the domino effect on most goods and services, we may be facing the first year in which the salary budget adjustment will fall short of the consumer price index inflation rate.

In the July 2008 consumer price index report from the Bureau of Labor Statistics (http://www.bls.gov/), the consumer price index had increased by 5.6% over July 2007 levels. Currently 2008 salary budgets (http://www.worldatwork.org/) are averaging 3.7%, which is higher than 2007 levels.

There is some good news as we move into 2009, however. According to the Financial Forecast Center (http://www.forecasts.org/), a financial think-tank group, inflation rates will come under control in 2009, returning to approximately 3.6% per year.

While there are numerous salary budgeting forecasts published this time of year, Global Human Capital & Associates uses two key surveys. The first is WorldatWork (http://www.worldatwork.org/). The second is Mercer, LLC (http://www.imercer.com/). Both have been providing salary budgeting forecasts for over 30 years.

The WorldatWork 2009 Salary Budget Survey contains data from 2,375 organizations representing 21 different industry segments. In terms of 2009 salary budgeting, WorldatWork reports the following:

2009 General Increase Budgets: 2.9%
2009 Merit Increase Budgets: 3.6%
2009 Total Increase Budgets: 3.9%

From an organizational level perspective WorldatWork reveals the following:

2009 Non Exempt Hourly Adjustments: 3.8%
2009 Exempt Salaried Adjustments: 3.9%
2009 Officer and Executives Adjustments: 4.1%

The report shows very little distinction by region of the country (range of 3.8% - 4.0%), metropolitan area (range of 3.7% to 4.1%), or key industry segment (range of 3.8% to 4.2%).

WorldatWork projects overall 2009 salary range adjustments at 2.5%.

The 2009 Salary Planning Report by Mercer has data from over 1,00 0 organizations representing over 12 million employees. Mercer reports an overall 2009 salary budget level of 3.7%, with 2009 budgeted structure adjustments at 2.8%.

I feel that based on the data that I have to-date; the 2009 trend will be approximately:

• Salary Structure Adjustment: 2.9%
• Merit Increase Budget: 3.8%
• Total Salary Budget Adjustment: 3.9%

Those who are interested in further specific survey results for 2009 relating to your business should drop me a line.

2009 will be a challenging year, especially for retaining our top performers as well as the strategic attraction of the "best and the brightest" given inflation, economic uncertainties, and the ability of these top performers to find excellent opportunities irrespective of the economy and job availability. It is my suggestion that you may want to reserve a good portion of your salary budget for your top 30% of the population with the result that a number of individuals will not receive increases given the economy for the year. Consider alternative rewards, including telecommuting, compressed work weeks, and gas cards, to help your organization through these challenging economic times.

I will be happy to assist you in developing your salary planning, sales incentive plans or executive management bonus for the New Year.


  Industry Trends
Market Brochure
Press Release - March 2007
Variable Pay Considerations and Trends for 2008
2009 Salary Trends
Observation Trends
GHC & Associates 'Where Strategy, People and Execution Meet'