Don't expect a big raise in 2008

As employers move toward one-time bonuses and 'pay for performance,' base salaries are barely keeping up with inflation.




Being a worker isn't getting any easier. We're moving from traditional pensions to 401(k)s, from full-scale health insurance to consumer-driven health plans and from steady annual salary increases to one-time "pay for performance" bonuses and incentives.

Base salaries are expected to increase about 3.9% on average in 2008, matching the average pay increase in 2007, according to a new Towers Perrin survey of about 4,000 companies worldwide. Those results match a number of other salary-expectation surveys.

It's not much when you consider inflation in October rose at a 3.5% annual rate. But more employers now supplement salaries with one-time bonuses and rewards.

More than 90% of employers offered such "variable pay" this year, up from 80% in 2006, according to an annual survey of about 1,000 large U.S. employers by Hewitt Associates, a human-resources consulting firm.

Spending on such programs hit almost 12% of employers' payroll budgets on average this year, up from 9% in 2003, and Hewitt expects that figure to top 12% in 2008.

So, there is money available beyond traditional salary increases, but it's only available to certain workers who meet and exceed companies' performance expectations.