Pressures from inflation and concerns over a tight labor market could translate into “healthy” salary increases in 2024, according to a recent survey looking at company plans for the new year.

The survey by global financial firm WTW showed U.S. employers are planning an overall salary increase of 4% for 2024. That’s down from the actual increase of 4.4% in 2023 but well above the 3.1% salary increase in 2021 and years prior.

“We are seeing healthy salary increases forecasted for 2024,” said Hatti Johannsson, research director, Reward, Data and Intelligence, WTW. “Though economic uncertainty looms, employers are looking to remain competitive for talent, and pay is a key factor. At the same time, organizations should remember pay levels are difficult to reduce if markets deteriorate. It’s best to avoid basing decisions that will have long-term implications on their organization on temporary economic conditions.”

In the survey, employers cited inflationary pressures (55%) and concerns about a tight labor market (52%) as the primary factors behind the salary increases.

Money isn’t the only retention factor for employers and employees, however. Some 63% of employers said they planned to offer more workplace flexibility – including an increase in remote or hybrid working – while 60% said there would be a broader emphasis on diversity, equity and inclusion. Fifty-five percent said they were working to improve the employee experience.

The survey was conducted in December with responses from 1,800 U.S. companies.

You can see the complete survey here.