Inflation is pinching company compensation plans for white-collar and management groups. Employees feel they are falling behind the rising cost of living, and companies admit they can't afford to match raises to the pace of inflation, Industry Week reports.
Many companies the magazine contacted plan to give salary increases averaging roughly 7 percent. That would be far short of the 18 percent inflation rate currently indicated by the consumer price index. "We didn't match the 13 percent rise in the CPI in 1979, and we won't match this year, either," one executive said.
Executives granting raises must deal with both their own company's budget limits and the voluntary federal guidelines restricting raises to a 7.5 -percent-to-9.5-percent range.