Employers are planning record-breaking bonuses for next year

Employers are expected to allocate the largest amount of their payroll budget to bonuses in the history of Aon’s 43-year study.

Is a recession looming? Maybe, or maybe not. Regardless of economic projections, however, U.S. companies are expected to continue hiring at a steady pace, and they’re also preparing to pay a record-setting amount in employee bonuses next year.

Aon’s 2019 U.S. Salary Increase Survey predicts the largest bonuses next year in the history of the 43-year old study, with variable pay—such as incentive or sign-on bonuses—rising to a record 13.1% of payroll. Base pay will increase by 3.2% next year, compared to an actual rise of 3.1% this year, according to the survey, which queries 1,216 U.S. businesses.

“This is a very positive development for employees who have seen mostly stagnant wage growth since 2011, when base pay budgets increased by 2.7% and variable pay spending was 11.6% of payroll,” says Ken Abosch, an employee-rewards consulting leader at Aon.

The projected rise in variable pay spending is “evidence that organizations want to share the benefits of strong business performance with their people but aim to do so in a way that does not add to their fixed costs,” he says.

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Workers in cities with  higher costs, such as San Diego and San Francisco, are expected to see higher-than-average increases in salary (3.9% and 3.8%, respectively). At the state level, workers in Texas are expected to do particularly well on the bonus front, with employers there expected to allocate 17.8% of their payroll to variable pay.

Hiring is also expected to remain strong in the U.S., according to the findings of ManpowerGroup’s latest Employment Outlook Survey. The survey, which measures over 60,000 employers’ hiring intentions in 44 countries, finds that hiring plans have strengthened in 15 countries, remained flat in six and weakened in 23. The survey asks employers whether they plan to hire, fire or maintain their headcounts in the quarter to come.

Japan, Taiwan and the U.S. had the most optimistic outlooks, with the “net employment outlook” (the difference between the percentage of employers expecting to hire more employees and those planning cutbacks) in each country at 26%, 21% and 20%, respectively. Employers in Spain (0%) and the Czech Republic (2%) had the weakest outlooks.

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The survey finds that, Brexit uncertainties notwithstanding, the U.K. is the only major economy in the EMEA region (Europe-Middle East-Africa) in which the financial and business-services sector is expecting a year-over-year hiring increase. As for Europe’s other major economies, employers in France (6%), Germany (6%) and Italy (4%) had stable outlooks.

In the U.S., employers in the leisure and hospitality (27%), professional and business services (24%) and wholesale trade and retail trade (23%) sectors have the strongest hiring outlooks.

“We are continuing to see employers planning to hire for technical and soft skills and committing to invest in their people with upskilling programs,” says ManpowerGroup Chairman and CEO Jonas Prising. “Having a workforce strategy that attracts and retains critical talent and develops new skills will be a key priority across all organizations as industries continue to transform in the months and years ahead.”