US companies are planning an average 4.0% salary increase in 2024, according to survey data from WTW. That’s lower than the actual increase of 4.4% for this year, but it’s still higher than the 3.1% increase in 2021.

“While we are seeing lower salary increases forecasted for next year, they’re still well above the ones we’ve seen for the past 10 years,” said Hatti Johansson, research director of Reward Data Intelligence at WTW. “This shows that companies are striving to stay competitive in an ever-changing work climate.”

Worker shortages influenced decisions this year, according to 61% of firms expecting changes in their salary budgets. It was followed by inflationary pressure, cited by 60%. Other factors prompting changes to salary budgets include concerns regarding employee expectations, 24%; anticipated recession or weaker financial results, 23%; and cost management, 20%.

The report also found that 51% of organizations reported having difficulty attracting or retaining employees this year, compared with 57% last year. However, respondents expect labor market pressures to ease, with only 35% expecting difficulties in 2024.

Meanwhile, in response to ongoing pressures, organizations are taking action to attract and retain talent, according to the report. Fifty percent of respondents have reviewed compensation of specific employee groups, and 28% are planning or considering doing so. In addition, 44% are hiring people higher in relevant salary ranges, raising starting salary ranges, reviewing compensation of all employees and enhancing the use of retention bonuses or spot awards. Non-monetary actions to attract and retain talent are also in motion.

The survey was conducted from April to June, with approximately 33,000 sets of responses from companies across 150 countries worldwide. In the US, 2,090 organizations participated.