In 2025, compensation trends will continue evolving with a focus on pay transparency, stable but slightly lower salary increases, and a growing emphasis on skills-based pay.
- Moderating Pay Increases: While pay raises remain a key tool for attracting and retaining talent, the rapid wage growth seen in previous years is slowing. Employers plan to increase salary budgets by around 3.7% on average, slightly lower than in 2024. Merit increases are expected to remain steady at 3.3%.
- Pay Transparency & Fairness: With new pay transparency laws in several U.S. states, companies must disclose salary ranges and address pay inequities. Employees increasingly demand clarity on compensation, and perceptions of pay fairness are becoming a key workplace issue.
- Skills-Based Pay: Employers are shifting from role-based to skills-based pay, particularly in high-demand fields like AI and data science. Companies are prioritizing measurable skills over job titles to ensure a strong return on investment.
While compensation trends remain stable, external factors like economic shifts and labor market conditions could lead to adjustments throughout the year.
Read more from our COMPENSATION SERIES:
Is Your Compensation Package Marketable?
The Paycheck Playbook: Key Compensation Trends Shaping 2025
Cracking the Compensation Code: How HR Synergy Can Help
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