As inflation slows and the labor market tightens, employees will see a third consecutive year of diminishing pay increases, while fewer companies plan on offering raises at all, according to a Gartner survey of 300 CFOs and finance leaders released on Monday.
Randeep Rathindran, a VP of research in Gartner’s finance practice, said in a press release that the ever-smaller increases reflect the declines in inflation and quitting.
Since late 2022, a time of high turnover and inflation, the number of respondents planning to increase pay has fallen steadily. By last October, the share of CFOs and finance leaders in the Gartner survey planning to raise salaries fell to 61%, down from 86% in 2022.
Over the same period, the share planning a “nominal change,” i.e., no raise, increased from just 9% in 2023 to 37% for 2025. The share of CFOs who said they plan to decrease wages has remained roughly flat, in the low single digits.
But. CFOs turning down the dial on raises should do so with a clear sense of the trade-offs, Rathindran said.
“CFOs must balance the potential risks of attrition and low engagement,” Rathindran said, “as employees still face stubbornly high costs for household necessities.”
If they’re making significant cuts to salary increases, CFOs “should use leading indicators of employee engagement to fully understand the potential impact on talent attrition.” Because if they don’t, they’ll find out through the leaving indicator.
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