Salary Increase Budgets for 2009 and 2010
September 2, 2009

Results from the 2009-2010 Culpepper Salary Increase Budgets Survey reveal that companies are continuing to make significant changes to their salary budgets in response to the recession. This year’s report includes data from 835 participating organizations across 73 countries and 17 international geographic regions.

Key Survey Findings

• Timing of Base Salary Reviews: Most organizations review base salaries annually on a common focal date.

• Base Pay Philosophy: Nearly 70 percent of companies have a base salary philosophy with an objective to either match or lead the market and pay salaries at or above current market levels.

• Salary Freezes: The number of companies freezing salaries is projected to decline from
  37 percent in 2009 to 13 percent in 2010. For companies with frozen salaries, 23 percent plan to unfreeze them by the end of 2009.

• Salary Reductions: Thirteen percent of companies reported that they cut salaries in the last 12 months. For companies that reduced salaries, one-third plan to reverse reductions by the end of 2009.

• Average Global Base Salary Increases: Global base salary increases are projected to rise from 1.90% in 2009 to 2.88% in 2010. Excluding salary freezes, global base salary increases are projected to rise slightly from 3.23% in 2009 to 3.25% in 2010.

• United States: Base salary increases for the U.S. are projected to rise from 1.66% in 2009 to 2.68% in 2010. Excluding salary freezes, base salary increases for the U.S. are projected to rise slightly from 3.05% in 2009 to 3.08% in 2010.

• Canada: Base salary increases for Canada are projected to increase from 1.07% in 2009 to 2.39% in 2010. Excluding salary freezes, base salary increases for Canada are projected to increase from 2.87% in 2009 to 3.01% in 2010.

• Europe: On average, base salary increases for countries in the Eurozone are significantly lower than other countries in Europe that have not adopted the euro (€) as their official currency.

• Regions with the Lowest Salary Increases: Base salary increases in Canada, the United States, and the eurozone are lower and less volatile than other regions of the world.

• Regions with the Highest Salary Increases: Base salary increases in South America and Africa are higher and more volatile than other regions of the world.

• Salary Range Structure Increases: Base salary range structure increases are projected to rise from 1.25% in 2009 to 1.58% in 2010. Excluding freezes, salary range structure increases are projected to decline from 2.81% in 2009 to 2.58% in 2010.

Changes Since 2008
Salary increase budgets have changed dramatically over the past year. In August 2008, before the global economic crisis unfolded, average base salary increases exceeded four percent (Figure 1) and only two percent of companies were freezing salaries (Figure 2). From late 2008 through mid-2009, the number of companies freezing salaries increased to 37 percent, which drove average base salary increases below two percent.

Overall, projections for 2010 have improved significantly compared to 2009. However, a relatively high number of companies plan to freeze salaries in 2010, and average projected base salary increases are still much lower than recent years.

The data collection time period for each data point is provided in parentheses. Averages include salary freezes (zeros).

The data collection time period for each data point is provided in parentheses.

Salary Freezes
The number of companies freezing salaries across all jobs and locations is projected to decline from 37 percent in 2009 to 12 percent in 2010.

Plans to Unfreeze Salaries:

• For companies with frozen salaries, 23 percent plan to unfreeze them by the end of 2009.

• Twenty-eight percent plan to unfreeze salaries before the end of 2010.

• Four percent plan to continue freezing salaries through the end of 2010.

• Forty-five percent of companies are uncertain when they will unfreeze salaries.

Salary Reductions
Thirteen percent of companies reported that they cut salaries in the last 12 months.

Plans to Rollback Salary Cuts:

• For companies that reduced salaries, one-third plan to reverse reductions
  by the end of 2009.

• One-fifth plan to reverse salary reductions before the end of 2010.

• Eight percent plan to keep salary reductions in place through the end of 2010.

• Forty percent of companies are uncertain when they will reverse salary reductions.

Plans to Reinstating Salaries and Providing Salary Increases:

• For companies that plan to reverse salary reductions, 64 percent plan to reinstate salaries back to original levels and then award base salary increases on original, unreduced salary levels.

• Thirty-six percent of companies plan to determine base salary increases on reduced salary levels.

Salary Reductions in 2010:

• For companies that did not reduce salaries in 2008 or 2009, only one percent plan to reduce salaries in 2010.

Global Overview of Base Salary Increases
Table 1 provides aggregated average base salary increases for 2009 and 2010 for major geographic regions throughout the world.  

Salary Increase Budgets Vary
In challenging economic times, it is critical to attract top talent and retain high performing employees who will drive your organization’s success in difficult market conditions. You cannot afford to guess about compensation rates for key employees or make "across the board" salary increases or freezes. It is important to carefully consider differences by country, job, company size, industry sector, and ownership status.

Additional Data Tables
In addition to the data tables and figures above, we provide a more comprehensive report
with additional data tables with budgeted base salary increases for 2009 and projected base salary increases for 2010, including: