Base pay increases take a back seat as employers invest in training and development

Employees are unlikely to receive large base pay increases next year, but will benefit from more training and development opportunities, according to a survey of European companies. 

The study of more than 430 companies in Europe – mostly multinationals – by Mercer Human Resource Consulting, found that only 16% of respondents are planning to increase their investment in base salary rises next year. In contrast, almost six in 10 (58%) say they will spend more money on training and career development initiatives for their staff.

Other aspects of employee reward that will attract little extra investment next year are retirement and healthcare benefits, with 16% and 20% of respondents saying they will spend more money on these benefits respectively. Instead, companies will invest more in annual cash bonuses (32%) and non-cash rewards (44%).

Paul O’Malley, principal at Mercer, said: “Many organisations are reluctant to invest more in base pay increases because they do not want to raise their fixed costs. By focusing on training, non-cash rewards and bonuses, they retain the flexibility over their investments, and can ensure the highest rewards go to the top-performing employees.”

The survey found that 32% of participants plan to develop the talents of existing employees to fill skills gaps, while 24% are relying on new hires. The remaining participants will use a combination of the two.



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