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August 24, 2001
Raises Unchanged But - Ouch! Inflation!
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Despite a softening labor market and a U.S. economic slowdown, American companies are not cutting back on salary increases for their employees, according to a new survey of more than 2,500 U.S. companies.

The survey, conducted by the nonprofit professional association WorldAtWork, found that American workers can expect salary increases in the mid four-percent range in 2001, for the fifth year in a row.

That finding jibes with a similar survey conducted by HR consultant William M. Mercer.

But WorldAtWork notes that while average salary increase figures have held steady for several years, workers won't be bringing home as much bacon as before because of inflation.

When adjusting the 2001 average salary increase to the U.S. Consumer Price Index, a worker's 4.5 percent salary increase will feel more like a 1.3 percent raise, as opposed to the nearly 3 percent adjusted-for-inflation raise the average worker received in 1998, when inflation was lower.

Other findings published in survey indicate that the availability of stock options keeps growing for lower-level workers.

In 2000, 22 percent of employers in the survey offered stock options to non-exempt hourly employees, and 24 percent of employers made stock options available to non-exempt salaried employees. In 2001, more than 28 percent of companies indicate they now offer stock options to these two groups of employees.

In addition, nearly three-quarters of companies today are offering stock options to exempt salary employees, up from 66 percent a year ago. Despite these increases, access to stock options for lower-level employees still lags far behind that of officers and executives (95 percent).

The 2001 survey also reveals that employers are continuing to focus on employee attraction and retention through variable pay programs and initiatives that balance work and life, despite the now-easing labor crunch. According to the survey, the percent of employers using some form of variable pay increased to 65 percent 2001, and nearly a quarter of those not currently using variable pay are considering implementing it in the year ahead.

Employer-sponsored work/life programs have continued to gain in popularity over the past few years. Forty-nine percent of responding companies report they have made changes in their work environment to attract and retain employees, including implementing flexible work schedules, relaxing dress code and allowing telecommuting. Thirty-two percent of companies have increased promotional/career development opportunities and 25 percent have utilized special training/educational opportunities to attract and retain employees

WorldatWork, formerly the American Compensation Association and the Canadian Compensation Association, is a global, not-for-profit professional association of more than 26,000 compensation, benefits and human resources professionals.

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