TD Magazine Article
Spend Where It Counts
When budgets are tight, many companies invest in nonsalary employee benefits.
Wed Oct 01 2025
As global markets reel from economic uncertainty, WTW's 2025 Salary Budget Planning Report shows that organizations across all regions are less concerned about inflation—the factors now constricting their pocketbooks are macroeconomic in nature. "The percentage of survey respondents citing inflation as a cause of budgetary adjustments has, again, dropped notably in the past year," the report notes, with more than one-quarter of more than 3,380 respondents saying they have such concerns. Other worries shift from rapid hikes to cautious consistency, reflecting persistent concerns over recession risks, ongoing cost pressures, and residual inflation.
In the face of such problems, companies must carry on and make budgetary decisions. One trend during a time of tight spending is to keep salaries steady. Many companies report that 2026 pay increases will be similar to the 2025 fiscal year, hovering around 3 percent to 4 percent on average in major markets.
To keep workers engaged despite static pay rates, employers are refocusing on nonsalary benefits. According to the 2025 Salary Budget Planning Report, 53 percent of organizations are improving employee experience; expanding training; enhancing diversity, equity, and inclusion initiatives; and boosting health and wellness benefits. Companies with restrictive budgets are also planning expenditures on talent development because, per WTW's 2025 Skills Survey, aligning salary structures with training targets—for instance, raising starting ranges or linking pay to newly acquired capabilities—cements the link between investment, performance, and retention.
A 2025 WorldatWork report emphasizes how perks (including retention bonuses), flexibility, and increased training opportunities are key to reversing attrition rates. Similarly, the 2025 Salary Budget Planning Report found that wage constraints have led employers in the US and the UK to shift their emphasis toward total reward offers, including upskilling programs, flexible work arrangements, and holistic benefits.
