US firms plan pay hike in 2010 on recovery: Mercer

American companies are planning to hike employees' salaries next year to retain talent as the economy is showing signs of recovery, says a report by consulting firm Mercer.

Many US firms had frozen pay hikes as these grappled with cutting costs following the recession. Expecting a turnaround, these companies are now focusing on retaining employees and engaging top talent.

While recession drove 30 per cent of employers to freeze salaries across the board in 2009, just 14 per cent are planning across-the-board freezes in 2010, Mercer said.

Of those employers granting base pay increases, the average increase is expected to be 2.7 per cent in 2010, down from an actual 3.2 per cent in 2009.

"While planned 2010 base increases have dropped a bit from employers' projections in April and are less than 2009 increases, this is still positive news given the fewer firm-wide pay freezes and staff reductions planned now compared to this time last year," a principal with Mercer's rewards consulting business Loree Griffith said.

According to the survey, employers at consumer goods and high-tech industries are expected to have the highest pay increase at 3 per cent, while workers in education, health and medical insurance sectors may take home less than average pay increases in 2010.

The education sector may witness a base pay increase of 2.2 per cent along with health and medical insurance at 2.4 per cent.

"Employers are still juggling selective hiring with selective cuts in staff as they evaluate specific workforce needs," Griffith said.

Griffith further said, "Recognition programmes, career development, training opportunities and creative communication campaigns – efforts that help keep employees engaged and motivated – along with incentive pay strategies will give companies a competitive edge as business begins to improve."

Mercer's 2009-2010 US Compensation Planning Survey was conducted among 350 mid-size and large employers across the US in November.