Oct. 31, 2007—Salaries are budgeted to increase 3.8% next year. This indicates a steady but cautious approach by employers who awarded the same average percentage increase in 2007 and 2006.

The Salary.com National Salary Budget Survey found that 64% of companies are planning no change in salary budget between 2007 and 2008, compared to only 26% who report a planned increase and 10% who expect a reduction. Conducted in August 2007, the survey represents more than 1,300 responses from HR professionals and is segmented by job level, industry, company size and geography.

“While overall salary increase budgets are expected to remain flat at 3.8%, differences in pay levels exist by industry, location and company size,” states Christine Midwood, director of survey services at Salary.com. “To attract and retain key talent, it’s important for companies to consider the data for their specific market when planning for next year.”

According to the survey, the largest increases are forecast for professional, scientific and technical services jobs (4.2%), while jobs in the arts, entertainment and recreation industry are budgeted to receive the smallest increase (3.4%). Workers in the Los Angeles and San Francisco metro areas can also expect larger than average increases (4.2%). The smallest increases are budgeted in the Kansas City (3.2%) and St. Louis (3.3%) metro areas.

Budget increases for 2008 are categorized by three pay components:

General Increase or Cost of Living Adjustment (COLA)—an increase for all employees designed to match increases in the cost-of-living

Merit Increase—an adjustment based on individual performance

Equity/Market Adjustment—adjustments made to bring individuals or groups to the estimated market level

“Despite the tight labor market, fixed salary increases will remain modest,” according to Bill Coleman, chief compensation officer at Salary.com. “This will force companies to find creative ways to reward top performers, such as implementing variable incentive programs or offering other noncompensatory rewards.”

Salary.com’s survey findings are in line with those of the 2007-08 WorldatWork Salary Budget Survey, which found an overall projected total salary budget increase of 3.9%.

[www.Salary.com]