Salary grunts have been warned that small pay increases are the “new normal” after a Mercer survey that showed yearly salary growth has fallen by more than half since the recession hit.The Mercer remuneration survey, which analysed pay data fr
Salary grunts have been warned that small pay increases are the “new normal” after a Mercer survey that showed yearly salary growth has fallen by more than half since the recession hit.
The Mercer remuneration survey, which analysed pay data from more than 233 organisations across the general market, found that the median pay increase had dropped to 2.5% in the year to February.
This was a steep drop from February last year, when the survey recorded median salary growth of 5.2%, an all-time high.
And the news gets worse- salary increases are forecast to remain under 3% for at least the next two years.
David Little, a senior associate in Mercer’s Information Product Solution business, said the pay increases of around 5% seen just before the financial crisis were unsustainable and the fall to 2.5% is a return to more normal levels of growth.
“In fact, with salary forecasts for 2011 and 2012 hovering at just under 3%, it seems this type of increase is going to be the new ‘normal’ for some time,” he said.
Despite the drop in pay rises the survey revealed a more optimistic mood among businesses – 51% are expecting better results in the coming year, compared to just 14% a year before, and 41% plan to increase their operating budget.
And while recovery to pay packets may slow, the labour market appears to be tightening quickly- the proportion of employers finding it more difficult to find employees has increased from 17% in 2009, to just under 50% in the last six months.
The survey also suggests that a sales job is the place to be right now.
Sales teams are expected to grow by 5.7% in the next year compared to finance and legal teams, which are expected to grow only 1%, according to Mr Little.
People in sales jobs also had the highest salary increase this year at 3.5% while IT geeks were the worst off with only a 1.1% increase overall.
