3/9/2023 0 Comments Compensation budget planning![]() ![]() Inequality in pay increases across sectors has become quite prominent over the years. These differences will lead to a large disparity between the ‘rich’ and ‘poor’ nations, with a serious risk to the future growth of emerging countries. In addition, developed countries have been able to provide generous stimulus packages to sustain their economies. In historically high-income countries the COVID-19 vaccination rate is very high, with an overall average of 95.44 people per 100 1, compared to a dramatically lower rate of 23.76 people per 100 for lower- and middle-income countries. The Economist has reported that vaccination rates will directly correlate with projected growth rates in emerging economies. There are therefore a lot of variables to consider when making generalizations and forecasts. Furthermore, the various stimulus packages, and the unwinding of these, may yet have unexpected consequences for economies in the ongoing pandemic. ![]() Companies are going through extensive planning in 2021, and will be experimenting with hybrid work models which better fit employees’ lifestyles and which may also result in long-term business savings.Įvery country, industry and company has experienced the pandemic differently and will have been impacted in different ways. Salary increases in 2022 are projected to be higher than 2021 increases (Figure 1). ![]() In 2020, an unprecedented number of companies cancelled salary reviews (15-20%), whereas in 2021 the figure has returned to historic levels (2-5%). Higher salaries in 2021 are partially attributable to fewer companies freezing pay increases compared to last year. Many sectors are recovering in line with the wider economy, and 51% of companies globally are reporting better than expected performance in 2021. Almost all business sectors have been considering the likely impact of anticipated and persistent inflation. GE Renewable Energy’s Global Total Rewards Leader, Vassilis Fragkoulis, listed inflation as a “key driver” in deciding 2022 salary increase budgets which businesses “need to continue monitoring”. Inflation may also be an influence, however, as it looks set to increase in several geographical areas. Many businesses awarding unexpectedly high salary increases are wishing to acknowledge and reward the resilience their employees have demonstrated throughout the pandemic. Some sectors have undoubtedly suffered exponentially, but many of those are now showing signs of recovery. In fact, the economy appears in very good health – welcome news for governments, which have intervened heavily and granted large stimulus packages to keep their economies from stalling. Most companies have been able to give higher than forecasted salary increases in 2021, largely due to their lower operating costs and an economy that has been better insulated than expected. ![]()
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