The labor line item could be increasing.

Employers expect base pay to increase 3.9% in 2025, marking a jump that’s “close to the fastest pace in two decades,” according to a new survey of 300 compensation leaders from the Conference Board.

While that’s slightly more than the 3.8% increase in 2024, though less than 2023’s 4.4%, it’s still a steady pace amid a tight labor market, the board noted. All in all, good news (for employees).

But why’s it happening now? “Despite a slower pace of hiring and slight increases in unemployment, elevated wages are expected to continue into 2025,” Dana Peterson, the Conference Board’s chief economist, said in a statement tied to the survey. “A shrinking labor supply is driving businesses to focus on retaining their current workforce, leading to sustained salary increases and higher real wage growth as inflation moderates.”

The bumps aren’t only appearing in paychecks, either. “To remain competitive and responsive to market dynamics, employers need to adjust their compensation strategies,” Diana Scott, leader of the Conference Board’s US human capital center, said in a statement. “Given fluctuating market conditions, leaders are increasing their use of compensation strategies that aren’t tied to base pay, like performance initiatives and other strategic priorities.”

For more on increasing compensation budgets, click here.—NP

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PwC won’t be doing business in the world’s second-largest economy for the next half year.

Chinese regulators announced a six-month ban and record $62 million fine on the Big Four accounting firm for its audits of China Evergrande Group, according to media reports.

Regulators found PwC Zhong Tian (ZT) “helped cover up” fraud at Evergrande’s main onshore unit, Hengda Real Estate, Reuters reported. Evergrande’s “collapse in late 2021 jump-started the country’s property crisis,” according to the Wall Street Journal.

The China Securities Regulatory Commission said it found that 88% of PwC ZT’s audit work on Evergrande from 2019–2020 was untrue, according to Reuters.

In a statement, PwC said its China unit’s audits of Evergrande were “unacceptably below the standards we expect of member firms of the PwC network.”

PwC said it fired six partners and five other employees who were “directly involved” with the Hengda audits, and has started issuing penalties against “current and former firm leadership” involved with the dealings.

Click here to keep reading.—AZ

Is AI reducing the need for freelance talent? Far from it, according to Erica Gessert, the CFO of Upwork, a platform connecting contingent workers with employers. On Morning Brew’s After Earnings podcast, she shared her thoughts on how AI is driving the creation of new jobs and skills, and how Upwork itself is using the technology.

This interview has been edited for length and clarity.

You have strong free cashflow, some great cash equivalents on the balance sheet. The market doesn’t seem to be fully getting it. And I’m curious if you think these AI fears of job replacement are overblown.

If you just look at our growing profitability profile and free cashflow profile, by any measure, we certainly feel the stock is undervalued…The reality is it’s been a relatively tough operating environment over the past six quarters…When money’s expensive, companies are focused on profitability and so they’re just spending less. And we see that with our enterprise clients.

Upwork’s been holding up much better, but it’s against a backdrop of, you’re right, a narrative out there that AI may come in and replace people’s jobs. Now what we’re seeing is sort of the opposite…We see it as a human-plus-machine future. Our freelancers are coming on, they’re adopting the most relevant, most recent tools and technology to help get work done.

What story do you need to tell so people understand these nuances in your business as it relates to AI?

We need to make sure that people continue to understand all the ways AI is enabling work today…The growth of AI jobs themselves is absolutely enormous. And we see no end in sight; on the lower end, data labeling and other things like that. On the higher end, prompt engineering and the building of AI models themselves.

Click here for more about AI’s potential impact on jobs.—CV

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