NU Online News Service, Sept. 27, 2004, 2:40 p.m. EDT

The typical employee can expect to get a merit raise of about 3.5% in 2005.[@@]

Researchers at Hay Group Inc., Philadelphia, are making that forecast in an analysis based on data in the human resources consulting firm’s compensation database. The database includes compensation information for 3 million employees at 1,700 employers.

Before 2001, merit raises averaged about 4%, but the average was only about 3.5% for general market employees this year, and the average probably will stay the same next year, Hay analysts predict.

In the insurance industry, raises averaged 3.5% this year and could increase to 3.6% in 2005, the analysts report.

The analysts note that, although the raises look low, they compare with a national Consumer Price Index inflation rate of just 3% for the 12-month period that ended July 31.

Thanks to efforts tie compensation more closely to company performance, bonuses seem to be increasing more rapidly than base salaries, Hay researchers report.