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June 03, 2011
Pay Increase Budgets Increased Slightly for Service Companies

Pay increase budgets increased from 2.2 percent in 2010 to 2.4 percent in 2011, according to the 2011 Compensation Data Services survey. Furthermore, in 2012, pay increase budgets are projected to increase to 2.5 percent.

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"Employers are taking a conservative approach, and we expect only a gradual increase over the next few years," said Amy Kaminski, director of marketing for Compdata Surveys.

The survey found that a majority of service organizations (70 percent) are using a portion of their budget to make market adjustments. Roughly 30 percent of survey respondents are making cost of living increases, while only 11 percent are using their pay increase budget for promotional increases.

Just over half of the respondents reported they are offering merit increases. The rate at which merit increases are used varies by industry. For example:

Industry
Rate
Engineering firms
72%
Business services
57%
Retail services
45%

According to the survey, the average merit increase budget reported in 2011 was 2.6 percent, with service employers projecting the same for 2012.

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