Two-thirds of employers are set to increase pay rates in the year ahead, with most looking to award an extra 3 percent in 2015, according to new research from XpertHR research, a provider of legal information to employers. XpertHR's US Pay Planning 2015 survey found that 64.8 percent of HR and reward specialists surveyed are confident of making a pay award in the coming year, 7.5 percent said there would be no salary raises next year, and 27.8 percent were unsure at survey time.

“This upswing reflects a mood of cautious optimism as the economy gets healthier and the number of long-term unemployed workers continues to drop,” said Peggy Carter-Ward, head of content at XpertHR. “As the economic recovery continues to take hold, employers are also keeping a watch on their competitors to ensure they can recruit and retain the people they need.”

The factors most commonly cited as driving up pay awards in the year ahead are improvements to employee productivity, better organizational performance and ability to pay, and the need to recruit and retain key employees.

Key findings include:

• Two in three pay awards (62.8 percent) are based on merit or performance, with across-the-board, cost of living increases accounting for a further one in four (25.7 percent)
• One in three pay awards (36.1 percent) takes effect in January, with around half (49.7 percent) taking effect within the first quarter of the year
• The median pay award in 2014 stood at 3 percent, with merit pots rising at the same rate
• Looking ahead to 2015, HR and reward specialists forecast a further 3 percent median increase in 2015 as employee productivity, company performance and the need to recruit and retain combine to keep headline pay increases above the rate of inflation

The full report, which obtained forecasts from HR and reward specialists in 166 organizations nationwide, is available here.