Salaries Are Getting Bigger But No One Is Getting A Raise, Here’s Why
On average employees across all industries are expected to see salary increases of around 4.6% in the coming year, however, the raises are negligible in a market riddled with 7.7% inflation.
With the rising cost of living and inflation not slowing down this year, employers have decided to increase salaries by 4.6% in 2023, which will be the highest jump in the last fifteen years. The cost of living crisis and inflation is affecting every citizen in the country, with many families and businesses having to make critical decisions about how to spend their dwindling money on rising essential services.
This salary increase is the result of the global survey completed by Willis Towers Watson, a consulting firm. The survey was conducted over a month starting on October 3 and included over 1,500 employers across the US.
The bigger salaries are due to the continuous rise in inflation and the tightening of the employment market. As everyone is experiencing higher bills and expenses, companies are now starting to cut down on costs, including employees.
As inflation is still sitting at 7.7%, any employees that receive the 4.6% increase to their wages will actually receive no increase as the rate of inflation is higher so they still have less money than before the economic crisis began. Also, what companies forecast to spend on wages annually can change, with over three-quarters of companies surveyed by Willis Towers Watson, stating that they overspent on bigger salaries in 2021.
Employers will increase their employees’ wages using several tactics, including reassessing their rewards package. At the same time, others are increasing the price of their products or service. Other employers are taking a more brutal route by restructuring different departments and reducing headcounts to make more funds available.
The newly acquired funds will be distributed depending on factors such as employee performance and the minimum salary expectation for the job, which could include a wage bump due to new pay transparency laws. The wage increase will not be distributed evenly to every employee across the company.
Employees with highly desirable skills and attributes will see the most considerable increase in their wages as their role makes the most impact on a company. Especially in this climate, businesses need effective employees who make a difference. Also, some job roles are difficult to hire employees for or are incredibly demanding, requiring a higher salary to make it more desirable for people to accept.
While Willis Tower Watson predicted a 4.6% wage increase, Gartner, a technology and research consulting firm, indicated that the wage increase would be more significant than that. The research they conducted in September found that employers will invest 7% more to make bigger salaries in 2023.
The cost of living due to the Ukrainian war and other factors, along with inflation, makes life much more expensive than a year ago. Both elements do not look like they are slowing down or receding anytime soon, which means that people and businesses will have to readjust their lives by slimming down their expenses and expendable money.
All will welcome the new wage increase for next year, and for some, it will be a lifeline. Even if the increase will not bring people back to the financial situation they were in before the pandemic. Hopefully, in 2023, the economic climate will become less unsettled, and everyday life can finally resume without all this financial pressure and negativity.
