Getting a Smaller Raise? Blame the cost of doing business

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The cost of doing business may mean smaller raises and bonuses for U.S. workers in 2006. A survey of chief financial officers found that fewer than 29 percent will give bigger salary increases in 2006, and just 20 percent anticipate boosting the amount of bonuses. CFOs who said they expected to increase raises and bonuses in 2006 were asked by what percentage points these forms of compensation would rise. The mean responses were 5 percent for raises and 7 percent for bonuses.

?Many companies may be hesitant to increase employee compensation because of other expenses impacting the business, such as rising health care and energy costs,? says Max Messmer, chairman and CEO of Robert Half International Inc. ?But an overly cautious approach can be detrimental, particularly as the competition for top candidates intensifies. Firms that fail to reward good performance risk losing their best talent.?

The survey was developed by Robert Half International Inc., a staffing service, and conducted by an independent research firm.

Meanwhile, economists warn that high fuel prices might linger through 2006, cutting into consumer spending and pushing inflation higher. The reasons why oil prices have risen so much range from a surge in demand in China and India to America?s fondness for gas-guzzling SUVs. Economists say the steady demand likely will keep the price of a barrel of oil in the $50 to $60 range, more than twice the price of two years ago. Such prices put a crimp in what consumers spend on other goods or services, in turn shrinking revenues for companies that provide those goods and services. ???

More Downsizing

Downsizing by U.S. employers increased for the fourth consecutive month in December 2005. For the year, announced cuts totaled 1,072,054, up 3.1 percent from 2004. It was the first time since 2001 that annual job cuts increased. The monthly job cut report was released recently by global outplacement consultancy Challenger, Gray & Christmas Inc. The greatest number of jobs were cut by employers in the government, nonprofit and automotive sectors. ?Unfortunately for workers in these sectors, there does not appear to be any relief in the near term,? said John A. Challenger, chief executive officer of Challenger, Gray & Christmas Inc. ?Budget deficits exist at all levels of government.? But Challenger added that increased business spending could result in continued job growth this year.