Does Your Company Offer Merit Increases?

PMMI recently released the results of a survey they conducted on Merit Increases. Out of the 490 companies they sent the survey to, only 86 responded. The overall results of the survey were that the majority of companies were planning a 2-3% merit increase for 2011. What I found most interesting about the survey, though, were the comments made by some of the respondents listed at the end.

A number of companies noted that they had not implemented any pay increases in the past few years due to the economy. Some companies stated that as a result of a decrease in sales and profitability, they put a freeze on all wages. I remember a time when annual wage increases were expected by employees as part of ‘keeping up with the cost of living.’ That time has past. Our businesses are now competing with the miniscule wages and lack of benefits in countries like China. How can a US manufacturer offer $10 per hour (or much better) plus health insurance, paid sick days, paid holidays, and paid vacations, when the Chinese manufacturers are simply paying $2 per hour (if that) and no benefits? Currently, we are able to do it because our workers are highly skilled and we implement lean manufacturing techniques. But time will change that too. The Chinese workers will fight to keep their jobs by improving their skills and putting out a better quality product. So US workers had better prepare themselves to no longer ‘expect’ a wage increase just because another year has gone by. There was one comment on the survey that made the most sense. It was: “We do not give annual merit increases. As individuals take on more responsibilities and ‘add value’ to their position, or are promoted to a more demanding position, they are compensated accordingly.” That may be the wave of the future for workers worldwide.

The author, Marge Bonura, is the Director of Sales & Marketing for New England Machinery, Inc. (NEM). NEM is a leading manufacturer of bottle unscramblers, cappers, orienters, retorquers, lidders, pluggers, pump sorter/placers, scoop feeders, hopper elevators and much more. The company has been in business since 1974 selling to the food, beverage, pharmaceutical, personal care, chemical, household products, automotive and other industries. For more information on NEM, visit their website at www.neminc.com.