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Employee Salaries to Increase in 2011

According to Mercer's 2010/2011 U.S. Compensation Planning Survey, more than 98 more of companies plan to give pay increases in 2011. And only 2 percent of the surveyed firms say they will institute across-the-board salary freezes in 2011, compared to 13% who said they would do so this year, and 31% who made that claim in 2009.

Among those firms increasing base pay, the average raise is expected to be 2.9% in 2011, up from an actual 2.7% this year, but down from 2009 levels, when the average raise was 3.2%. Although salary increases for 2011 are expected to be spread across most employee groups, many employers are concentrating on giving raises to their high-performing talent, for fear they will lose them if they are not rewarded monetarily for their efforts. Additionally, signs of economic recovery are reflected in employers' plans to increase salaries.

"It looks like salary raises are back and for good reason," said Catherine Hartmann, a Principal with Mercer's rewards consulting business. "The risk of losing key employees is top of mind as the economy recovers and certain labor markets improve. And while non-monetary awards such as career development and training are effective in retaining employees, employers realize that top-performing employees are loathe to going another year without an increase in pay. Investments in both cash and non-cash solutions will have a significant impact on avoiding post-recessionary flight."

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