It is without question that COVID-19 has had a devastating impact on the economy. We’ve seen unemployment rates rise to numbers we haven’t seen since the Great Depression. In response to the pandemic, a large majority of businesses have needed to conduct layoffs and furloughs. Several have been forced to shut their doors and completely close down.
What does this mean for those still working?
Good news. Salary increase budgets are still in play at most organizations. A recent WorldatWork 2020-2021 Salary Budget Survey conducted from May 27th to June 26th confirmed this information. This survey concluded that while employee compensation at organizations would increase, the average percentage of growth was down from the original projected average increase of 3.3 percent to 2.9 percent. The bad news is that this is the first time in 12 years salary increase budgets have dropped from the previous year.
How do industries compare?
While most industries are showing a downward shift in salary increase budgets, public administration and accommodation and food services actually showed no change from 2019. Educational services had the lowest salary increase budgets.
A growing number of companies are also issuing pay cuts this year instead of layoffs to reduce their labor cost during the pandemic. If you are considering issuing pay cuts, make sure they are consistent to avoid any legal ramifications. Develop a clear communication strategy for employees and include your plan to restore original pay.
What is your plan for issuing pay raises for 2021? Now is the time to develop your strategy and reviewing pay equities. Premier HR Solutions provides compensation services. We can custom design a compensation strategy and system for your organization and evaluate pay inequities to keep you in sync with the current market. To find out more, download our Compensation Services Brochure below.
Premier HR Solutions is an Austin based HR consulting company providing human resource services to emerging companies. Whether your company employs 5 people or 500, we can provide additional human resource assistance to help you grow or manage your business. If you have any questions about this topic or any other HR or recruiting-related questions, we are happy to help. Click on the link below to schedule a free consultation today.