The advisory firm WTW’s most recent salary budget planning report, which garnered 179 responses from Luxembourg, found that bosses plan for an average pay increases of 3.4% in 2024, less than the 3.8% expected this year.

Approximately 30% of companies admitted that their business outlook surpassed previous forecasts, while 63% reported it was consistent with their expectations.

The report highlighted two primary reasons for the expansion in pay budgets: 77% of employers acknowledged inflationary pressure as the predominant factor, while 46% cited the intensifying labour market.

“While we are seeing lower salary increases forecasted for next year, they’re still well above the ones we’ve seen for the last 10 years. This shows that companies are striving to stay competitive in a dynamic work climate,” remarked Mary Cloosterman, senior director at WTW.

In the following 12 months, 14% of Luxembourg respondents have plans to expand their overall workforce. Recruitment in information and communications technology roles is on the agenda for seven out of ten (68%) employers, with half intending to onboard more sales personnel and 49% seeking engineers.

Cloosterman noted, “It takes more than compensation to attract and keep great talent, and the past few years have pressed companies to be more resourceful. As workforces become more diverse, demanding and dynamic, the key is understanding their specific needs and preferences while providing the desired employee experience and careers within the company.”