The average salary increase per year

Written by colleen reinhart
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The average salary increase per year
Average increases in take-home pay vary from year to year. (money in hand image by Bruce MacQueen from

Average salary increases vary with economic conditions. Following a bad business year, fewer companies can offer raises on par with those doled out during good times, passing economic hardship onto employees. Luckily, surveys report that things are looking up for 2011 as the recession loosens its grip. Nevertheless, not all industries will see the same salary increases, and the highest average increases will go to top performers.

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Comparison with Previous Years

According to Towers Watson, economic improvements have positioned companies to reward their hard-working employees more in 2011 than during the hardest years of the recession. Overall, salaries are expected to increase by 2.7 per cent in 2011, up from 2.3 per cent this year and 1.6 per cent in 2009. Survey data from Towers Watson show that many companies who froze salaries to protect the bottom line will be offering raises in 2011. Thirty-two per cent of employers held salaries steady in 2009. In 2010, that value dropped to 12 per cent, and is expected to drop further, to 5 per cent, in 2011.

Where Increases are Expected

In the article "Salary Survey Projects Modest U.S. Increases for 2011," the Society for Human Resource Management reports the average percentage of company budgets that employers plan to dedicate to salary increases. In 2011, the projected budgetary percentage for raises is 3 per cent overall, with the lowest increases expected in the transportation industry. In the article "Most U.S. Employers Expect to Give Pay Raises in 2011," SHRM projects that raises will be the highest in oil and gas, professional services, energy and hospitality, with predicted salary increases of 3.5 per cent, 3.2 per cent, 3 per cent and 3 per cent respectively. Education and real estate will each see lower increases of 2.6 and 2.5 per cent.

Perform Well for the Best Payout

According to SHRM, employers are willing to shell out more to keep valued talent. While top performers (14 per cent of the workforce) can expect a 4.3 per cent raise, average performers (35 per cent of the workforce) and poor performers (7 per cent of the workforce) can expect just 2.6 and 0.5 per cent respectively. Performing well will also help you get promoted to management or even to the executive level, where year-end bonus payouts are generally higher. Executives received incentives equivalent to 35 per cent of their base pay in 2010, in comparison to just 5 per cent for office, clerical and production staff.

Global Comparisons

Average salary increases aren't globally consistent. In eastern economies like China and India, workers who met job performance expectations received base pay increases of 8.8 per cent in 2010 according to Towers Watson. In comparison, some European countries paid much less, with Spain and Ireland bumping wages up by just 1.6 per cent. However, Ireland and Spain tend to place a higher emphasis on superior performance when awarding raises, with a 300 per cent difference in percentage wage increase between top employees and average workers (in comparison to 200 to 260 per cent for other countries).

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