Report: Pay increase budgets steady for service companies

Kansas City, Kan. -- A report released Thursday by Compdata Surveys found that although the economy is still struggling to make significant strides towards recovery, small improvements are starting to become more evident.



The 2011 Compensation Data Services survey results found pay increase budgets remained relatively stable at 2.4%, reflecting a slight increase from 2.2% in 2010. Pay increase budgets are projected to continue slowly increasing in 2012 to 2.5%.



"There appears to be a level of cautious optimism within the industry in regard to the economy," said Amy Kaminski, director of marketing for Compdata Surveys. "Employers are taking a conservative approach, and we expect only a gradual increase over the next few years."



More than 70% of service organizations are allocating a portion of their budget to make market adjustments. Just over half are offering merit increases, while 29% are making cost of living increases. Only 11.3% of survey respondents are utilizing their pay increase budget for promotional increases.



The rate at which these increases are used varies by industry. Merit increases, for example, are being offered in retail at a rate of 45.5%.