RIO DE JANEIRO, BRAZIL – Uruguayan companies plan to grant a salary increase of 8% in 2022. The data comes from a survey conducted by global consulting firm Mercer in which 47 leading companies in Uruguay participated between March and April.
Analysts who responded to the latest Uruguayan Central Bank (BCU) Inflation Expectations Survey in May expect a price increase of 8.5% by the end of the year.
Thus, in the case of this sample of 47 leading companies, their workers would have a loss of purchasing power in the order of 0.5% this year.
The purchasing power of salaries in Uruguay closed the 12 months to April with a drop of 1.9%.
Forty-four percent of the firms plan to grant two increases during the year, 33% will grant one, 18% will grant three or more increases in 2022, and 4% indicated other options. The most prevalent months for these staff pay increases are March and June.
“The practice of granting two raises during the year is usually the majority in Uruguay,” said Ivana Thornton, Mercer’s Career Director for Argentina, Uruguay, and Paraguay.
Fifty-five percent of the companies include merit increases in the percentage of the planned increase, while 34% do not, and 11% do not have this type of increase.
“The merit increase is significant because it seeks to differentiate the increase based on the employee’s performance; in general, it represents between 3% and 5%,” Thornton explains.
PERFORMANCE BONUSES
Regarding the bonus paid for performance 2021, 36% of the organizations indicated that it was paid on target (according to the expected goal); 34% said it was paid above the target; 21% below; 4% indicated that it was not paid because the minimum performance results were not achieved and another 4% indicated that they do not have a bonus payment policy in the company.
“When we asked this question at the end of last year, the percentage of companies that believed they would pay above target was lower. However, we see that ultimately, the proportion of companies that exceeded expectations increased and, therefore, so did the bonus payout above target,” Thornton said.
The bonus is generally determined by the company’s performance locally, regionally, and eventually globally, coupled with the individual employee’s performance. These components impact each employee’s bonus differently, depending on their position in the company.
For example, at the highest levels, the company’s overall performance has a major impact on the bonus. On the other hand, individual performance has the greatest weight at the lowest levels. Bonuses are calculated based on a target or reference amount if the objectives are met at 100%.
As for 2021, the total annual salary increase granted by the companies was 8%. “This percentage coincides with what companies had estimated to grant in the year, according to the Spot survey conducted by Mercer in November 2021 among 30 companies in Uruguay. That is to say, the expectation that companies had was maintained,” said Thornton.
With information from El Observador