• Employers plan to spend 4.6% more on salaries next year, which is the most they have planned to spend in 15 years.
• Most of the organizations said that inflation and a tight job market were to blame for the big jump.
• This year, for example, 70% of the companies Willis Towers Watson polled said they spent more than they had planned.

Employers plan to spend 4.6% more on salaries next year, which is the most they have planned to spend in 15 years.

This is what the latest international survey from the consulting firm Willis Towers Watson, which included responses from 1,550 US employers, found. From October 3 to November 4, the poll was taken.

Most of the organisations said that inflation and a tight job market were to blame for the big jump.

But since the overall rate of inflation is still 7.7%, any raise that isn’t at least that much means that the person will be earning less because their money won’t buy as much.

Depending on how the market is doing, what companies expect to pay more for in a given year and what they end up paying are often two different things. This year, for example, 70% of the companies Willis Towers Watson polled said they spent more than they had planned. Overall, employers spent 4.2% more on wages this year than they would have in 2021.

How will that affect your raise?

Employers said they will use a variety of methods to pay for bigger salary increases next year. For example, 21% said they would reevaluate their total rewards package to make sure it has the most impact on retaining and engaging employees, 17% said they would raise prices, and 12% said they would restructure and cut headcount.

It won’t be the same for every employer in terms of how they will use the extra money for salaries.

Some people will make a lot more than the average. It will depend on a number of things, like how well employees do their jobs and what the going market rate is for a position. If the going market rate goes up, existing staff may have to get paid more. There will be more pressure to make these changes because of new laws about how pay is shown.

And, as always, those with the most in-demand skills are likely to get the biggest pay raises, according to Carolina Valencia, a vice president at Gartner in the human resource practise. “Because they are important or hard to fill, certain jobs will get a bigger share [of the salary budget increase].”

Gartner is expecting even larger pay increases next year. Its September and October survey of employers found that, on average, companies in North America plan to give merit raises of 7%.

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