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Mercer Says Salary Freezes Are Over

July 20, 2005

Only 2 percent of companies are freezing salaries for one or more segments of their population, compared with 16 percent in 2002, according to Mercer Human Resource Consulting.

The Mercer compensation study shows that U.S. employers plan to increase pay by about 3.6 percent in 2006, similar to this year's increases. Before the recession, 4 percent increases were common.

Steven Gross, leader of Mercer’s employee rewards business in the U.S., says that "the era of salary freezes is over." But, he says, while companies aren't upping salaries too much, they are using incentives and bonuses to increase employees' total pay.

Signing bonuses, for example, are being used, particularly for IT, accounting/finance, and sales and marketing jobs. IT employees are also being rewarded with "milestone awards" for finishing projects. Spot cash awards are being given to employees in IT, accounting/finance, human resources, and sales and marketing.

Mercer surveyed nearly 1,350 employers representing about 13 million employees.

More information on compensation is available online.