2025 pay trends to watch
While post-pandemic economic disruptions have now largely subsided, organizations and rewards professionals in the real estate, construction and engineering sectors are facing new challenges. These include changing regulatory environments, employee expectations and the use of artificial intelligence (AI) in the workplace. With these challenges in mind, many are using this opportunity to make changes to how they manage rewards decisions and practices to ensure their future policies are fit for purpose.
Employee pay isn’t only important to employees. Organizations also rely on compensation programs to support many objectives. Beyond attracting and retaining top talent, effectively designed pay programs help align employees with organization’s strategic objectives and promote positive business outcomes.
Residual inflationary pressures, concerns related to cost management and economic stagnation are among the top factors influencing 2025 budget plans. This is a departure from the prevalent concerns of recent years when business leaders were contending with tight labor markets and pandemic-related disruptions. 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. While salary increase expectations remain slightly elevated, 2025 forecasts are largely beginning to approach pre-pandemic norms.
| Region | Planned increase |
|---|---|
| North America | 3.9% |
| Asia Pacific | 4.6% |
| Central & Eastern Europe | 6.1% |
| Latin America | 5.4% |
| Middle East & Africa | 4.5% |
| Western Europe | 3.7% |
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% |
Voluntary attrition rates in the real estate, construction and engineering industry remain high compared to the general industry. These trends are driven by a heavy concentration of manual labor and skilled trade roles, which have faced elevated inflationary-related salary pressures in recent years.
| Region | Voluntary attrition rate |
|---|---|
| North America | 12.2% |
| Asia Pacific | 10.7% |
| Central & Eastern Europe | 8.3% |
| Latin America | 8.9% |
| Middle East & Africa | 10.6% |
| Western Europe | 10% |
41% of organizations report labor shortages in multiple talent segments.
Both in-demand jobs and in-demand skills highlight two key priorities for the real estate, construction and engineering sectors: retaining high-growth and highly technical roles, including technology and engineering roles, and retaining high-turnover roles, including support roles, which have been subject to increased cost-of living pressures.
| 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
Organizations are increasingly recognizing the importance of tailored and adaptable benefits to meet the diverse needs of their workforce. This shift includes a heightened focus on mental health and wellbeing support. By offering a range of options, organizations can better address individual employee needs, leading to higher job satisfaction and reduced turnover.
02
Organizations are adopting a comprehensive approach to employee rewards, including financial, physical and emotional wellbeing. This holistic strategy includes competitive salaries, robust health insurance, wellness programs and financial planning assistance. By addressing the multifaceted aspects of employee wellbeing, companies can create a more engaged and productive workforce, ultimately driving better business outcomes.
03
As the regulatory landscape evolves, pay transparency and equity remain top of mind for organizations. Organizations are increasingly required to disclose salary ranges and ensure fair compensation practices across all levels and demographics.
04
The rapid advancement of AI and automation, coupled with the enduring trend of remote work, is prompting organizations to reevaluate their work models. Organizations are exploring hybrid and fully remote setups to enhance efficiency and reduce operational costs. This reassessment involves optimizing workflows, investing in digital tools and redefining job roles to leverage the benefits of technology while maintaining a balanced and productive work environment.
05
Salary compression remains a significant concern for organizations, especially after several years of high inflation and substantial salary increases. This issue arises when the gap between the salaries of new hires and existing employees narrows, potentially leading to dissatisfaction and turnover among long-term staff. To address this, organizations may need to conduct more thorough reviews of their salary structures in 2025.
