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BONUSES, NOT RAISES, FOR MORE EMPLOYEES

 SAN FRANCISCO, Aug. 31 /PRNewswire/ -- Looking to control costs, 21 percent of an extensive cross-section of U.S. companies, up from 14 percent this year, will not give some employee groups annual salary raises in 1994; instead, they will provide eligible workers with one- time lump sum bonuses averaging 3.5 percent of salary according to a survey by William M. Mercer Inc. The survey is based on data from 2,700 large employers with a combined payroll of 9.4 million Americans nationwide.
 "Raises have a compounding effect on payroll costs, but bonuses of this type do not, a fact that can help employers hold the line on rising expenses," notes Mercer principal Linda Ison.
 Employees who survive the latest round of corporate layoffs can expect a continued shrinkage in the size of average salary increases, projected to be 4.5 percent in 1994, down from 4.6 percent in 1993, according to the Mercer survey, the most extensive analysis of its type. Although modest in size, the raises should help insulate employed Americans from continued 3 percent annual inflation projected for this year as well as 1994.
 Upcoming raises will tend to be comparatively higher in the biotechnology (5.9 percent), computer and software (5.1 percent) and pharmaceutical (5.1 percent) industries; among those sectors due for comparatively lower raises will be the pulp and paper (3.7 percent) and aerospace (3.9 percent) industries; as well as education (3.7 percent).
 Raises will be mostly undifferentiated, however, in the nation's five broad geographic regions: they will average 4.4 percent in the Northeast, Southeast, North Central and South Central states, and 4.6 percent on the West Coast.
 And, continuing a trend of the last few years, raise practices will be fairly egalitarian at all levels of the organization, averaging 4.4 percent for nonexempt employees, 4.4 percent for exempt employees and 4.6 percent for executives. (Nonexempt employees, typically including production and clerical workers, are eligible under law for overtime payments; exempt employees, including middle management and professional employees, do not qualify for such payments.)
 "A recessionary economy, coupled with relatively low inflation, should continue to depress raise levels for some time," Ison predicts. As of 1994, 13 years will have passed since salary increases registered double-digit levels, she notes. In 1981, average raises were 10.6 percent while inflation soared at 10.3 percent.
 Other innovative compensation practices were identified by the survey. For example, 12 percent of the companies have (and 20 percent are considering) small group incentive plans, and 43 percent have (17 percent considering) special recognition awards. Additionally, 8 percent of the companies sponsor skill-based pay programs and 9 percent sponsor gain-sharing plans, although 19 percent and 14 percent respectively are considering such programs.
 William M. Mercer Inc. is one of the nation's leading actuarial, employee benefits, compensation and human resources management consulting firms. Its 3,400 employees serve more than 9,000 employers from offices in 43 U.S. cities. The firm, headquartered in New York, is the U.S. operating company of William M. Mercer Cos. Inc., a worldwide consulting organization serving clients from offices in 101 cities in 24 countries and territories. William M. Mercer Cos. Inc. is part of Mercer Consulting Group Inc., a wholly owned subsidiary of Marsh & McLennan Companies Inc.
 -0- 8/31/93
 /CONTACT: Charles King, 415-393-6527, or Linda Ison, 502-561-4654, or Edward L. Hansen, 212-345-7318, all of William M. Mercer/


CO: William M. Mercer Inc. ST: California IN: SU:

LH-PK -- SF002 -- 7442 08/31/93 11:00 EDT
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Publication:PR Newswire
Date:Aug 31, 1993
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