The Conference Board's survey covers 533 major companies in six industry sectors.
The board attributes the decline to the recent economic downturn, a continued atmosphere of uncertainty in the aftermath of the September 11 tragedy, and various corporate scandals, including the Enron collapse and the woes of Arthur Andersen and other firms.
"It should also be noted that a number of companies have taken actions which have the effect of reducing company salary expenditures but are not reflected in the size of the budget," says Charles Peck, Conference Board compensation specialist. "These include actions like delayed pay increases, hiring freezes and layoffs."
Estimates for 2003 indicate average pay increase budgets will be a uniform 4 percent for all employee groups in all industry categories.
Although the majority of employees will still receive the average 4 percent increase, a higher proportion of all employee groups will get lower increases both this year and next than in preceding years.
A fortunate piece of news in a time of economic uncertainty is that The Conference Board currently projects only a 1.5 percent rise in inflation for 2002, considerably lower than the average 4 percent salary increase. The 2.6 percent CPI increase predicted for 2003, while higher, is still comfortably below the average pay increase.
From the HR.BLR.com Library:
the first time in nine years, average salary increases in many key industries, including manufacturing, trade, and utilities, have dropped below 4 percent for some major employee groups, The Conference Board reports.