US employers are planning smaller pay raises and fewer promotions next year, compared to what they gave this year.

According to a new survey by human resources consulting firm Mercer. More than 900 clients from 15 industries completed the survey, which covers employers of varying sizes.

According to their responses, Mercer predicts that compensation budgets for merit increases will grow by 3.5% in 2024, down from 3.8% in 2018. A merit increase is a pay raise based on the performance of the previous year.

Despite this, non-union employees will see average salary increases of 3.9%, down from 4.1% this year. Promotional increases and base pay increases can be offered, as well as minimum wage adjustments or off-cycle raises, which may be used to keep someone if a competitor tries to hire them away.

The survey also found that employers plan to promote fewer employees – just 8.7%, compared to 10.3% this year.

Although the expected pay increases are lower than in 2023, they are still higher than before the pandemic.

It is only a small sample of what employers are thinking as they plan for 2024, because the Mercer survey took place between July 31 and August 11.

It is likely that compensation budgets for next year won’t be finalized until December or even January in some cases. Between now and then, a lot can change.

According to the report, next year’s pay increases are the result of a tight labor market and low unemployment rates. Compensation pressures are likely to decline further if the labor market stabilizes and inflation cools further as we move towards the end of the year,” said Lauren Mason, a senior principal at Mercer.