2025 budget increases are expected to be slightly lower than those of recent years. Organizations are focusing on adapting salary structures, regional retention strategies, emphasizing personalized benefits and sustainability in rewards.
Employee pay isn’t only important to employees. Organizations also rely on compensation programs to support many objectives. Reward professionals have charted new approaches to pay and rewards, effectively elevating their value as decision makers in attracting, engaging and retaining key talent that moves the business forward.
Inflationary pressure, concerns related to cost management, and the anticipation of a recession or decline in business results are among the top factors influencing budget plans for 2025. This is a departure from the prevalent concerns of recent years when business leaders were contending with tight labor markets and evolving employee expectations. As a result, many organizations are preparing for 2025 budget increases that are slightly lower than that of recent years but more in line with the actual spend they’ve made in 2024.
| Region | Planned increase |
|---|---|
| North America | 3.7% |
| Asia Pacific | 5.2% |
| Central & Eastern Europe | 6.0% |
| Latin America | 4.5% |
| Middle East & Africa | 5.4% |
| Western Europe | 3.6% |
Changing labor market and economic conditions as well as socio-economic trends have increased the pressure on organizations to update their pay programs, according to the results of our 2024 Pay Effectiveness & Design Survey’s global results. The following charts show job families (functions) that are seeing the fastest and slowest compensation growth.
Most respondents to the global Pay Effectiveness & Design Survey indicated that they have already made changes or are planning or considering making changes to their base salary structure design through fundamental shifts.
Multiple factors are encouraging increased levels of pay program communication within organizations.
| Pay program communication drivers | Percent |
|---|---|
| Increasing regulatory requirements | 64% |
| Company values and culture | 51% |
| Environmental, social and governance / diversity, equity and inclusion agenda | 51% |
| Employee expectations | 46% |
| HR’s confidence in pay programs | 42% |
| Leadership’s confidence in pay programs | 38% |
International and global organizations generally approach the way they communicate pay program information on an organization-wide basis, with local variation where required.
Employee attraction and retention is one of six core objectives for pay programs in organizations around the world, especially as employees are most likely to say pay is a driver of attraction and retention, according to WTW’s 2024 Global Benefits Attitudes Survey.
| Driver | Percent | |
|---|---|---|
| Attraction | Pay (including bonus) | 56% |
| Job security | 34% | |
| Flexible work arrangements (e.g., working remotely, flexible work hours) | 32% | |
| Retention | Pay (including bonus) | 43% |
| Job security | 39% | |
| Working environment (e.g., location, facilities) | 32% |
These general industry findings indicate that voluntary attrition rates vary by region, with the highest rates in North America (9.2%) and the lowest in Central & Eastern Europe (4.7%), highlighting the importance for clients to consider regional differences in employee retention strategies.
| Region | Voluntary attrition rate |
|---|---|
| North America | 9.2% |
| Asia Pacific | 8.0% |
| Central & Eastern Europe | 4.7% |
| Latin America | 6.2% |
| Middle East & Africa | 5.8% |
| Western Europe | 5.8% |
41% of organizations report labor shortages in multiple talent segments.
It’s interesting to see the variation in in-demand jobs and in-demand skills. Sales and compliance management skills are among the top 3 in-demand skills in every region.
| Region | In-demand jobs | In-demand skills |
|---|---|---|
| North America | 1. Customer service representative 2. Warehouse associate 3. Software engineer |
1. Customer service management 2. Sales management 3. Compliance management |
| International | 1. Software engineer 2. Application developer 3. Solution architect |
1. Sales management 2. Compliance management 3. Technical reporting |
| Europe | 1. Customer service representative 2. Software engineer 3. Project manager |
1. Sales management 2. Compliance management 3. Customer service management |
| Region | Largest planned increases | Lowest planned increases |
|---|---|---|
| Asia Pacific | Biopharma & life sciences | Retail |
| Central & Eastern Europe | Biopharma & life sciences | Construction |
| Latin America | Retail | Transportation |
| Middle East & Africa | Construction | Transportation |
| North America | Real estate | Manufacturing (non-durables) |
| Western Europe | Real estate | Retail |
Two-thirds of organizations around the world are already or are planning / considering communicating pay rate or pay range information to job candidates, according to our 2024 Pay Transparency Survey’s global results.
77%
of organizations are more likely to communicate the
hiring rate / range for the job to external job candidates.
56% of organizations apply a consistent approach for all job levels and types to external job candidates.
Organizations with operations in locations with increased legislation tend to apply a more consistent approach across the entire enterprise when sharing pay rates and ranges with prospective employees.
Locations sharing pay rates and ranges with prospective employees:
01
There is a growing emphasis on personalized and flexible benefits, with a stronger focus on mental health and well-being support.
02
Technology and data analytics are being integrated to tailor rewards programs more effectively.
03
Organizations are moving toward a holistic total rewards package that includes financial, physical and emotional well-being.
04
Sustainability and social responsibility are becoming more important in reward offerings. Companies are incorporating incentives for eco-friendly practices and recognizing employees who contribute to social causes, aligning rewards with these values.
