Salary increases in 1983 will be in the 6 percent range -- one third lower than this year's raises -- according to the Compensation Institute of Los Angeles. Another survey by Hewitt Associates of Chicago projects raises for salaried employes at 7.1 percent.
Total compensation of the country's top executives last year went up by 13 percent in the estimation of Towers, Perrin, Forster & Crosby, New York management consultants. That compares with an average increase of 7.3 percent in the hourly earnings of nonsupervisory workers on private nonfarm payrolls, as reported by the Bureau of Labor Statistics.
The Compensation Institute, which is owned by the consulting firm William A. Mercer Inc., polled 400 nonfarm industries of all sizes last spring. At that time, all the companies responded that they intended to give pay boosts next year. The average increase for all workers amounted to 7.5 percent. The range was from 7.25 percent for executives in the public sector to 9 percent for executives of private corporations.
Since the poll was conducted, however, the institute's director, David Thomsen, estimated that 1983 salary increases -- when offered at all -- will fall in the 6 to 6.5 percent range. That compares with a 9 percent average raise for the public and private sectors in 1982. Corporate executive salary increases will be about 2 percentage points higher than hikes for top public employes.
The dramatic slide in average pay increases is shown by the Hewitt survey of a representative sample of 615 companies in the private sector: 10.1 percent in 1981, 8.5 percent in 1982 and 7.1 percent projected in 1983. This follows inflation rates of 12.4 percent in 1980, 8.9 percent in 1981 and 5.9 percent currently in 1982.
The BLS calculates that in the year ending in October, real average weekly earnings -- actual raises minus inflation -- of nonsupervisory workers in the private nonfarm sector, dropped by 1.3 percent.
The Hewitt survey also reported that 7 companies out of 10 have instituted actions to control compensation costs. About half of all companies are relying on attrition to thin the ranks of employes. Attrition hits workers hardest: 90 percent of the companies weed out lower paid employes before executives (50 percent). For the two companies in five that are laying off employes, the same 90 percent figure applies, and 35 percent of the firms report furloughing executives.
Stretching out the time interval between raises is the policy of 28 percent of the respondents. The average length is 4.5 months beyond the regular yearly pay increase, but in hard-hit industries, the delay may be as long as eight months. Two companies in 10 are making use of special early retirement offers. And the bigger the company, the more apt it is to offer an incentive to leave early.
Pay freezes have been instituted by 16 percent of the companies in the survey. In this case executives are hit first, followed by lower level employes. Freezes are most common in the Midwest, where the percentage of companies doing so rises to 22 percent.
Finally Hewitt reports that 7 percent of the companies it surveyed have made pay cuts, averaging about 8 percent for nine months. The worst hit industries include diversified manufacturing, where the cuts average 10.7 percent and are expected to last more than 10 months.
In its study on executive compensation for 1981, Towers found that the base salary plus annual bonus of the top officers of the 100 largest U.S. industrial corporations was $684,000, up 13 percent. For those 100 corporations ranked at the bottom of the Fortune 500, the total cash and bonus of the chief executive officer averaged $307,000, up 14 percent. The median bonus for the first group amounted to 55-70 percent of base salary; in the second group, it was 30-39 percent.
According to the BLS, the gross average weekly earnings of nonsupervisory workers in the private sector amounted to $270.74 in October, or $14,078 a year.