More raises, smaller pay increases in 2010

By Blake Ellis, contributing writer


NEW YORK (CNNMoney.com) -- The good news is that you're more likely to get a raise next year. But the bad news is that the boost may not be as big as you'd like.

An estimated 14% of employers will freeze salaries across the board in 2010, down from 30% in 2009, according to a survey released Monday by consulting and outsourcing firm Mercer.

Of the organizations that plan to give raises next year, the average base pay increase is projected to be a paltry 2.7%, down from 3.2% in 2009, and even lower than what was predicted earlier this year. In April, a Mercer survey projected pay raises in 2010 to be 2.9%.

But more employers offering pay increases is a good sign for the job market overall, according to Mercer.

"This is still positive news given the fewer firm-wide pay freezes and staff reductions planned now compared to this time last year," Loree Griffith, a principal with Mercer's rewards consulting business, said in a statement.

As employers prepare for an economic recovery, they are focusing on retaining the talent they already have, Mercer said.

"Recognition programs, career development, training opportunities and creative communication campaigns -- efforts that help keep employees engaged and motivated -- along with incentive pay strategies will give companies a competitive edge as business begins to improve," said Griffith.

Increases by industry. The best raises will be in the consumer goods and high-tech industries, where employers are predicted to increase pay 3%.

The smallest raises will be in the education industry, where pay is projected to increase less than the average rate, with a predicted base pay bump of just 2.2%. The survey projects a 2.4% pay raise in the health and medical insurance sector.

Less than 5% of consumer goods and insurance firms are predicted to have pay freezes next year, while 20% of durable goods manufacturers and 18% of services firms will continue to freeze pay, the survey showed.

Mercer's 2009/2010 US Compensation Planning Survey Update was conducted in November and includes responses from more than 350 mid-size and large organizations in the United States.  To top of page

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