Workers likely to see smaller raises

12.18.08
By Sarah Beldo

In a troubled economy with a fairly cheerless employment outlook, some people may consider themselves lucky just to have a job.

But that doesn't mean you can't complain if your annual raise seems a bit smaller than usual this year. And it looks like it probably will be.

A new survey by Hewitt Associates polled 640 large firms about their plans for employee compensation.

The findings reveal that around half of these companies have plans to reduce the amount spent on workers' salaries, while another 25 percent are still considering the measure.

Among those who are going to adjust labor costs, employees are set to receive pay increases that fall below 3 percent for the first time in the 32-year history of the poll.

Exempt employees on a salary will see their wages rise by an average of 2.5 percent, nonexempt salaried employees will get around 2.6 percent more and executives will be taking home about 2.2 percent more.

These miniscule increases are nothing personal. Ken Abosch of Hewitt explained that for many companies, cutting base pay is necessary "to avoid pay freezes, layoffs, or in some cases, just to survive."

He added that many employers recognize that they have to continue to reward high-performing employees, even in a recession, to avoid losing them.

However, separate figures suggest that many U.S. workers aren't planning to go anywhere different at any point soon.

Data from the Bureau of Labor Statistics indicates that the "quit rate" - which indicates how easily people transition to a new job, is holding steady at 1.6 percent, the lowest rate in nearly four years, CNN Money reports.

If you are considering a job change or suspect you may be laid off, it is a good idea to obtain a copy of your credit report as part of your efforts to be financially prepared for any contingency.

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Employers may reduce raises to avoid layoffs