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COMMITTEE OF THE WHOLE Packet - 6/28/2016 CITY OF MUSKEGO COMMITTEE OF THE WHOLE AGENDA June 28, 2016 6:05 PM City Hall, W182 S8200 Racine Avenue CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL STATEMENT OF PUBLIC NOTICE APPROVAL OF AGENDA APPROVAL OF MINUTES - June 14, 2016 NEW BUSINESS 1.) Toolkit for Potential Filing of Protest Petitions with the City 2.) 2017 Budget Goals COMMUNICATIONS AND MISCELLANEOUS BUSINESS AS AUTHORIZED BY LAW ADJOURNMENT Possible reconvening of the Committee of the Whole immediately following Common Council Meeting of the same date to continue work on agenda items NOTICE IT IS POSSIBLE THAT MEMBERS OF AND POSSIBLY A QUORUM OF MEMBERS OF OTHER GOVERNMENTAL BODIES OF THE MUNICIPALITY MAY BE IN ATTENDANCE AT THE ABOVE-STATED MEETING TO GATHER INFORMATION; NO ACTION WILL BE TAKEN BY ANY GOVERNMENTAL BODY AT THE ABOVE-STATED MEETING OTHER THAN THE GOVERNMENTAL BODY SPECIFICALLY REFERRED TO ABOVE IN THIS NOTICE. ALSO, UPON REASONABLE NOTICE, EFFORTS WILL BE MADE TO ACCOMMODATE THE NEEDS OF DISABLED INDIVIDUALS THROUGH APPROPRIATE AIDS AND SERVICES. FOR ADDITIONAL INFORMATION OR TO REQUEST THIS SERVICE, MUSKEGO CITY HALL, (262) 679-4100. Un approved CITY OF MUSKEGO COMMITTEE OF THE WHOLE MINUTES June 14, 2016 6:15 PM City Hall, W182 S8200 Racine Avenue CALL TO ORDER Mayor Chiaverotti called the meeting to order at 6:51 pm. PLEDGE OF ALLEGIANCE ROLL CALL Present: Alderman Wolfe, Borgman, Kapusta, Engelhardt, Kubacki, Madden and Mayor Chiaverotti. Also present: Director Mueller, Director Muenkel, Attorney Warchol and Tom Zagar, Conservation Coordinator. Absent: Alderman Hammel STATEMENT OF PUBLIC NOTICE Director Mueller stated that the meeting was properly noticed. APPROVAL OF AGENDA APPROVAL OF MINUTES - May 24, 2016 and June 2, 2016 Alderman Kubacki motioned to approve May 24, 2016 and June 6, 2016 minutes. Alderman Wolfe seconded motion. NEW BUSINESS 1.) Zoning Code Review - Accessory Structures in Front Yards 2.) Luther Parker Cemetery 1.) Zoning Code Review Alderman Wolfe requests a review of ordinance on structures placed in front yards. Home owner spoke to her concerns that residents don't have any restrict ions as to what they put in their front yard. People are putting unsightly sheds with junk all around them in the front yards, boats and trailers. Would like the City to enforce or put into place an ordinance not allowing structures and junk in front yards . Director Muenkel stated the ordinance does allow for detached structures but must be within set back area. Permits are required and must meet architectural requirements. Temporary structures also need to get approval. Director Muenkel proposed that Aldermen view neighborhoods and consider options for meeting next month. Consensus was to review the ordinance and discuss at meeting next month. 2.) Luther Parker Cemetery Tom Zagar recapped the documents distributed and the history of the Luther Parker Cemet ery maintainance. Lead the discussion on the current concerns with the Cemetery. Consensus is to leave the Cemetery as it is. COMMUNICATIONS AND MISCELLANEOUS BUSINESS AS AUTHORIZED BY LAW ADJOURNMENT Possible reconvening of the Committee of the Whole immediately following Common Council Meeting of the same date to continue work on agenda items Alderman Kubacki motioned to adjourn at 7:48 pm. Alderman Madden seconded motion. ▪ Definition of the Budget Process The budget process consists of activities that encompas the development, implementaion, and evaluation of a plan for the provision of services and capital assets. ▪ Mission of the Budget Process To help decision makers make informed choices about the provision of services and capital assets and to promote stakeholder participation in the process. ▪ Key Characteristics of the Budget Process ● ● ● ● ●Provides incentives to government management and employees. Note: Definition, Mission and Key Characteristics are recommeded practices from the National Advisory Council on State and Local Budgeting which was created and endorsed by the Governmental Finance Officers Association. Incorporates a long-term perspective; Establishes linkages to broad organizational goals; Focuses budget decisions on results and outcomes; Involves and promotes effective communication with stakeholders; and 2017 SUMMARY BUDGET GUIDE Comprehensive Goals ■ Apply Net New Growth as Allowed per State Levy Limit Maintain and Enhance Services for a Growing Community ■ Maintain High Bond Rating Low Interest Rates & Reduced Fees on Debt Issuance ■ Limit One-Time Funding Sources Allows Focus on Ensuing Budget vs. Prior Year Deficit ■ Avoid Depletion of Special Revenue Funds Accountability of Funds for Purpose Intended ■ Support Economic Drivers, Including TID Creations and Incentives ■ Strengthen Efficiencies through Implement Shared Services Cost Savings & Improved Customer Service ■ Recognize and Respect the Expertise of Incumbent Employees thru Competitive Pay Increases & Benefit Packages ■ Abide by General Operating Fund Balance Policy Promote City's Fiscal Health Preservation ■ Budget Goal Setting as a Collaboration between the Committee of the Whole, Mayor & Staff Ensure Long-Term Viability for Economic Development Maintain and Recruit Quality Workforce Transparency and Inclusive Team Results Outcome PROPOSED ▪ BUDGET CATEGORIES As defined per State Statute, the City's budgets are presented using budget categories which include various departments & accounts. The following chart provides brief comprehensive objectives for budget development of each category. Mayor/Council Finance & Administration Assessor Law Non-Departmental Municipal Court Building Maintenance Information Technology Police Patrol Civilian Patrol Volunteer Fire Non-Departmental CDD-Building Inspection Animal Warden Public Safety Supplies Engineering Public Works Divisions - Administrative Maintenance Street Signs Storm Water Snow Removal Street Lights Machines & Equipment Garage Bridges & Dams Weed Cutting Parade & LML Contribution Library Recreation Planning Division Rationed Use of TIF Residual Funds/Loans/Grants CDA Economic Development Conservation Computer Replacements Transparency and Accountability Mobile Devices  Annual Equipment Replacements Police  Estimated Useful Life over 1 Year Public Works  Cost in Excess of $5,000 (equipmtent) & $10,000 (infrastructure) DEPARTMENT / ACCOUNT GOALS CAPITAL OUTLAY CONSERVATION & DEVELOPMENT PUBLIC WORKS HEALTH & HUMAN SERVICES GENERAL GOVERNMENT GENERAL FUND CATEGORY OUTCOME Technology, Shared Services & Cooperation between Departments Safe Community Continue & Strengthen Efficiencies and Improved Services Proactive Equipment Investment Provide Area Resources CULTURE, RECREATION & EDUCATION Enhanced Web Page Listings & Links Support Safe & Well Maintained Infrastructure, Parks & Regional Drainage Maintenance Plans Quality & Efficient Programs, Non-Compete Policy with Local Businesses Shared Services & Agreements, Avoid Duplication Increase Commercial Tax Base & Continue Allocation of Conservation Coordinator/Forester Personnel Costs to Operations Tranparency and Proper Use of Landfill Funds Apply General Accepted Accounting Principles Maintain Minimum Reserve Equal to 0.50% of Operating Expenses for Unforseen EventsCONTINGENCYNon-Departmental Avoidance of Emergency Outside Funding ▪ BUDGET CATEGORIES (continued) As defined per State Statute, the City's budgets are presented using budget categories which include various departments & accounts. The following chart provides brief comprehensive objectives for budget development of each category. ▪ TID #8 - Freedom Square ▪ TID #9 - CDA ▪ TID #10 - Moorland Gateway ▪ TID #11 - Parkland Towne Center *On-Going Fund Proposals - *Assessment Fund Balanced Budgeting *Equipment Fund Balanced Budget and Equipment Investment *Facilities Needs Fund Dedicate up to 10% as Funds Become Available Quality Facilities & Enhanced Services Allocate $25K for Contracted Property Revaluation Expense Allocate $25K for Various Equipment Needs, including VFD Operating Expenses Incurred by Authority Supports Development of Identified AreasCommunity Development Authority Complies with Agreement Compensated Absences Fund Maintain Full Funding in Reserve Utilization for Employee Payouts/Accountability Anticipated TID closing date & value to be added to tax base (amount based off of 2015 data): →07/31/2027 (Increment = $6,347,500 / Taxes = $104,506) →12/31/2018 - $227,975 (Increment = $13,846,700 / Taxes = $227,975) →10/31/2027 - $863,162 (Increment = $52,426,600 / Taxes = $863,162) →12/31/2031 -> 12/31/2036 - (Increment = $31,940,000 supplied by Developer / Taxes = $525,865) Designated for Local Business Loan & Grant Program (Resolution #105-2009)Residual TIF/Capital Improvement Retain Business & Increase Commercial Tax Base Unless Added Value, Dedicate Tax Increments for Debt Payments & Maintain Closing Date Utilization of Tax Revenues by All Entities 10% Contribution from Landfill Tipping Fees Per Agreement for Respective ProjectsLand & Open Space Conservation Conservation Initiatives Already Incurred/Comp Plan Priority Funding Per Landfill AgreementStorm Water Manage Storm Water Issues Landfill Maintain minimum $1,000,000 Fund Balance Under Terms of Contract Funds for Unforeseen Events 10% Contribution from Landfill Tipping Fees Per Agreement for Private Well TestsWell Testing Reserve Necessary Well Maintenance Fund Document Management Project & Associated Fees to Enhance Program Internal and External Efficiencies/Transparency Park Dedication Park Improvement Fund Refuse & Recycling Revolving Loan Emerald Park Inc & Future Parkland Standing Committees Cable TV State Funding Loaned at a Discounted Rate to Promote Local Growing Businesses Retain Business & Increase Commercial Tax Base Administrative Engineering & Committee Fees to Monitor Landfill Operations Under Terms of Contract Accountability Tracks Subdivider Fees Against Relative Projects - Earmarked for 'Sandhill'Quality Parks per Comp Plan Maintain User Rates for Waste Removal Service Fees Less Impact to Users OUTCOME 10% Contribution from Landfill Tipping Fees Per Agreement for Parks Projects SPECIAL REVENUE FUNDS Tax Increment Districts DEPARTMENT / ACCOUNTFUND GOALS ▪ BUDGET CATEGORIES (continued) As defined per State Statute, the City's budgets are presented using budget categories which include various departments & accounts. The following chart provides brief comprehensive objectives for budget development of each category. ▪ FUND BALANCE The City's fund balance policy addresses the ideal level of fund balance to be maintained in the General Fund which is the primary operating fund of the City, as well as Committed Special Revenues. In general, as recommended by the City Auditors and GAAP, the policy objectives are to provide for the following: ▪ Working capital to meet cash flow needs during the year (2 to 4 months of budgeted expenditures from the subsequent year) ▪ Preserving the City's credit rating for borrowing monies at favorable interest rates and minimizing fees ▪ Comfortable margin of safety to address unanticipated expenditures / emergencies and unexpected declines in revenue due to economic downturns, natural disasters, etc. ▪ Resource to stabilize annual fluctuations in the property taxes paid by the City of Muskego taxpayers ▪ Unfunded portion of accrued compensated absences liability Shared Costs & Improved LiabilityRecreation Facilities CAPITAL BORROWING/ EXPENDITURE FUNDS Police & City Hall Facilities Maintain Campus Location Evaluation Cost Sharing Program with School District and Other Partners Maintain Communications with Bond Rating Agencies & Provide for Full Continuing Disclosure General Obligation, Notes & Refundings Transparency & Accountability Quality Facilities, Enhanced Services & Cost Effective GOALS OUTCOME Limit Debt Issuance to Long-Term Projects not Utilizing Current Revenues Sound Fiscal Policy with Future User Contributions Total Long-Term Obligations should not exceed Statutory Limit of 5% of the Equalized Valuation of Taxable Property Fair and Equitable Taxation Cap Total Annual General Obligation Debt (30% of Revenues)Financial Sustainabilty DEBT SERVICE FUNDS FUND DEPARTMENT / ACCOUNT Latest Cost-Of-Living Adjustment Automatic Determinations COLA history How COLA is used Federal SSI benefit rate Wage-indexed amounts What is a COLA? Legislation enacted in 1973 provides for cost-of-living adjustments, or COLAs. With COLAs, Social Security and Supplemental Security Income (SSI) benefits keep pace with inflation. No COLA There will be no increase in Social Security benefits payable in January 2016, nor will there be an increase in SSI payments. How is a COLA calculated? The Social Security Act specifies a formula for determining each COLA. According to the formula, COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). CPI-Ws are calculated on a monthly basis by the Bureau of Labor Statistics. A COLA effective for December of the current year is equal to the percentage increase (if any) in the average CPI-W for the third quarter of the current year over the average for the third quarter of the last year in which a COLA became effective. If there is an increase, it must be rounded to the nearest tenth of one percent. If there is no increase, or if the rounded increase is zero, there is no COLA. COLA Computation The last year in which a COLA became effective was 2014. Therefore the law requires that we use the average CPI-W for the third quarter of 2014 as the base from which we measure the increase (if any) in the average CPI-W. The base average is 234.242, as shown in the table below. Also shown in the table below, the average CPI-W for the third quarter of 2015 is 233.278. Because there is no increase in the CPI-W from the third quarter of 2014 through the third quarter of 2015, there is no COLA for December 2015. CPI-W for— 2014 2015 July 234.525 233.806 Social Security Page 1 of 2 6/21/2016 August 234.030 233.366 September 234.170 232.661 Third quarter total 702.725 699.833 Average (rounded to the nearest 0.001) 234.242 233.278 Page 2 of 2 6/21/2016 Carlson Dettmann Consulting 6733 Frank Lloyd Wright Ave, Middleton, WI 53562 Tel: 920.418.2140 Email: patrick.glynn@carlsondettmann.com Web: www.carlsondettmann.com 2016 Wisconsin Public Sector Annual Wage Planning Survey September 22, 2015 Carlson Dettmann Consulting, LLC is pleased to release the results of our 2016 Wisconsin Public Sector Annual Wage Planning Survey. This survey is based on the planned (or adopted) decisions made as it relates to pay structure salary increases for calendar year 2016. A follow-up survey is anticipated in late-spring 2016 to determine the actual adopted increases. As it pertains to this survey, for most employee groups, the averages across the state indicate continued modest wages increases are planned from 2015 to 2016. The results estimate a 1.6% structural increase for non- union staff (exempt and non-exempt) for 2016. The details of the sample sizes (n), and averages associated with each of the employee groups, are captured below. While we requested regionalized information, and have provided the data, we encourage entities to use the regionalized data sparingly as there are many cases where the sample sizes aren’t at an optimal level. The data reflects the responses of those organizations that provided a structural increase. However, the responses also indicate that more-and-more organizations are moving to some form of performance-based pay, and the decisions (as it relates to structural increases) faced by these employers continue to be challenging. As in our prior survey, police (law enforcement) continues to lead the pack in terms of wage increases. Based on the commentary, the larger-than-normal wage increases can be partially attributed to offsets for increased pension contributions. For purposes of comparison, the recently published 42nd Annual “WorldatWork 2015-2016 Salary Budget Survey” reports higher anticipated structural increases. For the Central Region (which includes Wisconsin), the anticipated salary structure increase for 2016 is 2.0%, as well as an actual reported average of 2.0% for 2015. Carlson Dettmann Consulting, LLC is available to address all of your employee compensation needs. Please contact Patrick Glynn (920.418.2140) or Charlie Carlson (608.239.7991) for more information on how we may assist your organization. Wisconsin Public Sector Statewide Summary: By Group Regions Used in Salary Increase Survey: Employee Group 2016 n Average Exempt (Non-Union) 141 1.7% Non-Exempt (Non-Union) 134 1.6% General Municipal (Union) 36 1.5% Teachers (Union) 7 1.7% Police (Union) 113 2.0% Fire (Union) 29 1.7% Transit (Union) 8 1.4% Carlson Dettmann Consulting 6733 Frank Lloyd Wright Ave, Middleton, WI 53562 Tel: 920.418.2140 Email: patrick.glynn@carlsondettmann.com Web: www.carlsondettmann.com Wisconsin Public Sector Statewide Summary: By Wisconsin Region Wisconsin Region Exempt Non- Union Non- Exempt Non- Union Union (General Municipal) Union (Teachers Union (Police) Union (Fire) Union (Transit) Region 1: Northern 1.7 1.6 1.7 1.6 2.0 1.9 * Region 2: Western 2.3 1.6 1.6 * 2.0 0.9 * Region 3: Central 1.7 1.4 2.1 1.8 1.9 2.0 1.0 Region 4: Fox Valley-Northeast 1.7 1.7 1.8 1.7 2.2 1.9 1.9 Region 5: South Central 1.6 1.5 0.9 * 1.7 1.0 0.5 Region 6: Southeast 1.7 1.6 1.4 1.6 1.9 1.6 * * = No Response Wisconsin Public Sector Statewide Summary: By Organization Type Organization Type Exempt Non- Union Non- Exempt Non- Union Union (General Municipal) Union (Teachers Union (Police) Union (Fire) Union (Transit) City 1.9 1.7 1.5 * 2.0 1.8 1.4 County 1.4 1.3 1.2 * 1.8 1.3 * School District 1.7 1.8 1.9 1.6 * * * Technical College 1.9 1.8 1.7 1.8 * * * Town 1.6 1.6 * * 1.7 * * Village 2.0 1.7 2.6 * 2.2 0.5 * * = No Response Number of Respondents: City 65 Region 1: Northern Wisconsin 19 County 45 Region 2: Western Wisconsin 21 School District 6 Region 3: Central Wisconsin 21 Technical College 3 Region 4: Fox Valley-Northeast Wisconsin 34 Town 5 Region 5: South Central Wisconsin 19 Village 35 Region 6: Southeast Wisconsin 45 Total: 159 Total: 159 Page 2 of 6 6/22/2016 Page 3 of 6 6/22/2016 Download Infographic (/PDF/Global-Salary-Increase-Projections-2017-Infographic.pdf) Share this infographic: Page 4 of 6 6/22/2016 Get All of ERI's Projections for 2017 Fill out this form to download the Planning Global Compensation Budgets for 2017 white paper, which includes: • 2017 projections for unemployment rate, GDP, CPI, and salary increase • Analysis of global economic trends by region • Data for 72 countries First Name * Last Name * Email * Download White Paper About ERI Economic Research Institute was founded over 25 years ago to provide compensation applications for private and public organizations. 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Consider key trends from the recent World Economic Outlook as reported by the International Monetary Fund1 (IMF): 1. “Global growth continues, but at a sluggish pace that leaves the world economy more exposed to risks, says the IMF’s latest World Economic Outlook (WEO). • The WEO forecasts global growth at 3.2% in 2016 and 3.5% in 2017, a downward revision of 0.2% and 0.1%, respectively, compared with the January 2016 Update . . . • In a recent speech, IMF Managing Director Christine Lagarde warned that the recovery remains too slow, too fragile, with the risk that persistent low growth can have damaging effects on the social and political fabric of many countries . . . 2. Moderate recovery in advanced economies • Growth in advanced economies is projected to remain modest at about 2%, according to the WEO. The recovery is hampered by weak demand, partly held down by unresolved crisis legacies, as well as unfavorable demographics and low productivity growth . . . 3. Emerging and developing economies slowing further • While emerging markets and developing economies will still account for the lion’s share of world growth in 2016, prospects across countries remain uneven and generally weaker than over the past two decades. • The WEO projects their growth rate to increase only modestly—relative to 2015—to 4.1% this year and 4.6% next year. 4. Risks on the rise • In the current environment of weak growth, risks to the outlook are now more pronounced • These include: A return of financial turmoil, impairing confidence. For instance, an additional bout of exchange rate depreciations in emerging market economies could further worsen corporate balance sheets, and a sharp decline in capital inflows could force a rapid compression of domestic demand. A protracted period of low oil prices could further destabilize the outlook for oil-exporting countries. A sharper slowdown in China than currently projected could have strong international spillovers through trade, commodity prices, and confidence, and lead to a more generalized slowdown in the global economy. Shocks of a noneconomic origin—related to geopolitical conflicts, political discord, terrorism, refugee flows, or global epidemics—loom over some countries and regions and, if left unchecked, could have significant spillovers on global economic activity. • On the upside, the recent decline in oil prices may boost demand in oil-importing countries more strongly than currently envisaged, including through consumers’ possible perception that prices will remain lower for longer.” Source:1. “IMF Survey: Global Economy Faltering from Too Slow Growth for Too Long.” International Monetary Fund, 12 Apr. 2016. Web. 20 Apr. 2016. (http://www.imf.org/external/pubs/ft/survey/so/2016/NEW041216A.htm) 3 | ERI Economic Research Institute | Planning Global Compensation Budgets for 2017 | June 2016 Projected 2017 Salary Increases by Country and Historical Trends An analysis of early projections of 2017 salary increases across 72 countries is provided in Table 1 to support businesses in next year’s salary increase budgeting. This table also includes the International Monetary Fund’s updated research on 2015, 2016, and 2017 actuals/projections for unemployment, growth in gross domestic product (GDP), and change in the consumer price index (CPI). This advanced look at 2017 salary increase projections is based on ERI Economic Research Institute’s extensive database, plus global historical trends and projections. Data from governmental resources, publications, and over 25,000 companies were assessed in this review. Table 1 – 2015-2017 Global Salary Increase Trends with Key Economic Indicators Unemployment Rate2 Gross Domestic Product2 Consumer Price Indices2 Salary Increase1 % Labor Force % Change from Prior Year % Change from Prior Year % Change from Prior Year 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 Argentina 6.5 7.8 7.4 1.2 -1.0 2.8 --19.9 28.0 30.0 25.0 Brazil 6.8 9.2 10.2 -3.8 -3.8 0.0 9 8.7 6.1 8.0 7.9 7.3 Canada 6.9 7.3 7.4 1.2 1.5 1.9 1.1 1.3 1.9 3.0 3.0 3.0 Chile 6.2 6.8 7.5 2.1 1.5 2.1 4.3 4.1 3.0 5.3 5.0 4.6 Colombia 8.9 9.8 9.4 3.1 2.5 3.0 5.0 7.3 3.4 -4.6 4.5 Costa Rica 8.3 3 8.2 3 8.1 3 3.7 4.2 4.2 0.8 1.1 3.0 5.8 5.5 5.7 Mexico 4.3 4.0 3.9 2.5 2.4 2.6 2.7 2.9 3.0 4.7 4.7 4.6 Panama 5.1 3 5.1 3 5.1 3 5.8 6.1 6.4 0.1 0.8 2.0 5.3 5.0 5.2 Peru 6.0 6.0 6.0 3.3 3.7 4.1 3.5 3.1 2.5 -5.0 5.0 United States 5.3 4.9 4.8 2.4 2.4 2.5 0.1 0.8 1.5 3.0 3.0 3.0 Venezuela 7.4 17.4 20.7 -5.7 -8.0 -4.5 121.7 481.5 1,642.8 54.0 65.0 85.0 Australia 6.1 5.9 5.8 2.5 2.5 3.0 1.5 2.1 2.4 3.4 3.5 3.6 China 4.1 4.1 4.1 6.9 6.5 6.2 1.4 1.8 2.0 8.0 8.0 8.0 Hong Kong 3.3 3.2 3.1 2.4 2.2 2.4 3.0 2.5 2.6 4.4 4.5 4.5 India 3.5 4 3.4 4 3.4 4 7.3 7.5 7.5 4.9 5.3 5.3 10.8 10.9 10.9 Indonesia 6.2 5.9 5.7 4.8 4.9 5.3 6.4 4.3 4.5 9.5 9.2 9.2 Japan 3.4 3.3 3.3 0.5 0.5 -0.1 0.8 -0.2 1.2 2.4 2.5 2.5 Malaysia 3.2 3.2 3.2 5.0 4.4 4.8 2.1 3.1 2.9 5.9 5.7 5.8 New Zealand 5.8 5.9 5.8 3.4 2.0 2.5 0.3 1.5 1.9 3.0 3.2 3.3 Pakistan 6.0 6.1 6.1 4.2 4.5 4.7 4.5 3.3 5.0 12.0 11.2 11.5 Philippines 6.3 6 5.9 5.8 6 6.2 1.4 2 3.4 6.8 6.7 6.8 Singapore 1.9 2.0 2.0 2.0 1.8 2.2 -0.5 0.2 1.3 4.4 4.3 4.5 South Korea 3.6 3.5 3.3 2.6 2.7 2.9 0.7 1.3 2.2 5.0 5.0 5.1 Taiwan 3.8 3.8 3.9 0.7 1.5 2.2 -0.3 0.7 1.1 3.5 4.0 4.0 Thailand 0.9 0.8 0.7 2.8 3.0 3.2 -0.9 0.2 2 5.6 5.9 6.0 Vietnam 2.4 2.4 2.4 6.7 6.3 6.2 0.6 1.3 2.3 10.4 10.4 10.5 Sources:1. Economic Research Institute2. International Monetary Fund. 2016. World Economic Outlook: Too Slow for Too Long. Washington, April.3. International Monetary Fund. April 2016. World Economic Outlook Database4. World employment and social outlook: Trends 2016 / International Labour Office. – Geneva: ILO, 20165. World employment and social outlook: Trends 2015 / International Labour Office. – Geneva: ILO, 2015; updated January 20, 2015 Am e r i c a s As i a P a c i f i c 4 | ERI Economic Research Institute | Planning Global Compensation Budgets for 2017 | June 2016 Unemployment Rate2 Gross Domestic Product2 Consumer Price Indices2 Salary Increase1 % Labor Force % Change from Prior Year % Change from Prior Year % Change from Prior Year 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 Algeria 11.3 11.6 12.1 3.7 3.4 2.9 4.8 4.3 4.0 -6.5 6.3 Austria 5.7 6.2 6.4 0.9 1.2 1.4 0.8 1.4 1.8 2.6 2.9 3.0 Belgium 8.3 8.3 8.2 1.4 1.2 1.4 0.6 1.2 1.1 2.3 2.5 2.5 Bulgaria 9.2 8.6 7.9 3.0 2.3 2.3 -1.1 0.2 1.2 -4.0 4.0 Cyprus 15.3 14.2 13.0 1.6 1.6 2.0 -1.5 0.6 1.3 -1.7 1.8 Czech Republic 5.0 4.7 4.6 4.2 2.5 2.4 0.3 1.0 2.2 2.0 2.5 2.8 Denmark 6.2 6.0 5.8 1.2 1.6 1.8 0.5 0.8 1.4 2.5 2.6 2.7 Egypt 12.9 13.0 12.9 4.2 3.3 4.3 11.0 9.6 9.5 10.0 10.0 10.0 Estonia 6.8 6.5 6.5 1.1 2.2 2.8 0.1 2.0 2.9 2.8 3.0 3.3 Finland 9.3 9.3 9.0 0.4 0.9 1.1 -0.2 0.4 1.4 1.5 2.3 2.4 France 10.4 10.1 10.0 1.1 1.1 1.3 0.1 0.4 1.1 2.5 2.7 2.8 Germany 4.6 4.6 4.8 1.5 1.5 1.6 0.1 0.5 1.4 2.9 3.0 3.0 Greece 25.0 25.0 23.4 -0.2 -0.6 2.7 -1.1 0.0 0.6 1.8 1.8 2.0 Hungary 6.9 6.7 6.5 2.9 2.3 2.5 -0.1 0.5 2.4 3.0 3.5 3.5 Ireland 9.4 8.3 7.5 7.8 5.0 3.6 0.0 0.9 1.4 1.8 2.1 2.2 Israel 5.3 5.3 5.3 2.6 2.8 3.0 -0.6 -0.1 0.9 2.5 3.0 3.1 Italy 11.9 11.4 10.9 0.8 1.0 1.1 0.1 0.2 0.7 2.8 2.6 2.7 Jordan 11.1 5 11.1 5 11.0 5 2.5 3.2 3.7 -0.9 0.2 2.1 6.0 5.7 5.8 Kazakhstan 5.0 5.0 5.0 1.2 0.1 1.0 6.5 13.1 9.3 -8.5 8.5 Kenya 9.2 5 9.1 5 9.1 5 5.6 6.0 6.1 6.6 6.3 6.0 --8.0 Kuwait 2.1 2.1 2.1 0.9 2.4 2.6 3.4 3.4 3.5 -5.0 5.0 Latvia 9.9 9.5 9.1 2.7 3.2 3.6 0.2 0.5 1.5 -3.3 3.3 Lebanon 6.7 5 6.8 5 6.9 5 1.0 1.0 2.0 -3.7 -0.7 2.0 --6.7 Lithuania 9.1 8.6 8.5 1.6 2.7 3.1 -0.7 0.6 1.9 -3.5 3.6 Luxembourg 6.9 6.4 6.3 4.5 3.5 3.4 0.1 0.5 1.3 3.0 2.9 3.0 Morocco 9.8 9.7 9.6 4.5 2.3 4.1 1.6 1.5 2.0 -4.5 4.5 Netherlands 6.9 6.4 6.2 1.9 1.8 1.9 0.2 0.3 0.7 3.0 2.8 2.8 Norway 4.4 4.6 4.4 1.6 1.0 1.5 2.2 2.8 2.5 3.2 3.0 3.0 Poland 7.5 6.9 6.9 3.6 3.6 3.6 -0.9 -0.2 1.3 3.0 3.0 3.1 Portugal 12.4 11.6 11.1 1.5 1.4 1.3 0.5 0.7 1.2 1.8 2.0 2.2 Qatar 0.3 5 0.4 5 0.4 5 3.3 3.4 3.4 1.7 2.4 2.7 5.0 5.0 5.0 Romania 6.8 6.4 6.2 3.7 4.2 3.6 -0.6 -0.4 3.1 4.6 4.5 4.7 Russia 5.6 6.5 6.3 -3.7 -1.8 0.8 15.5 8.4 6.5 8.1 8.0 8.0 Saudi Arabia 5.8 4 5.7 4 5.7 4 3.4 1.2 1.9 2.2 3.8 1.0 5.0 5.0 5.0 Slovakia 11.5 10.4 9.6 3.6 3.3 3.4 -0.3 0.2 1.4 -2.7 2.8 South Africa 25.4 26.1 26.7 1.3 0.6 1.2 4.6 6.5 6.3 6.3 6.8 6.8 Spain 22.1 19.7 18.3 3.2 2.6 2.3 -0.5 -0.4 1.0 2.4 2.3 2.4 Sweden 7.4 6.8 7.0 4.1 3.7 2.8 0.7 1.1 1.4 2.6 2.8 2.8 Switzerland 3.3 3.5 3.3 0.9 1.2 1.5 -1.1 -0.6 -0.1 2.1 2.0 2.1 Tanzania 3.1 5 3.2 5 3.2 5 7.0 6.9 6.8 5.6 6.1 5.1 --7.0 Tunisia 15.0 14.0 13.0 0.8 2.0 3.0 4.9 4.0 3.9 -6.5 6.5 Turkey 10.2 10.8 10.5 3.8 3.8 3.4 7.7 9.8 8.8 9.0 8.0 7.9 Uganda 3.6 5 3.5 5 3.4 5 5.0 5.3 5.7 5.8 6.7 5.9 --6.8 Ukraine 9.5 9.2 8.8 -9.9 1.5 2.5 48.7 15.1 11.0 18.0 11.7 11.5 United Arab Emirates 3.5 5 3.4 5 3.3 5 3.9 2.4 2.6 4.1 3.2 2.7 4.9 5.0 5.0 United Kingdom 5.4 5.0 5.0 2.2 1.9 2.2 0.1 0.8 1.9 3.0 2.8 3.0 EM E A ( E u r o p e , M i d d l e E a s t , a n d A f r i c a ) 5 | ERI Economic Research Institute | Planning Global Compensation Budgets for 2017 | June 2016 Key Observations Americas Salary increases are projected to remain stable at 3.0% in the United States and Canada from 2016 to 2017. Minimal change is also expected in unemployment over the same time period with Canada increasing slightly from 7.3% to 7.4%, and the United States decreasing from 4.9% to 4.8%. Two countries in South America will continue with hyperinflation. With the change in CPI approaching 19.9% in Argentina in 2017, a 25% salary increase is projected. The situation in Venezuela is out of control, with spiraling inflation at 482% in 2016, escalating to 1643% in 2017. Salary increases are projected at 85% in 2017, but will require close observation throughout the year. Purchasing power in Venezuela continues to erode, and this dire inflationary environment is expected to experience the most significant reduction in real income in the world. Europe, Middle East, and Africa In the Euro zone, modest changes to unemployment and a challenging financial environment will require a cautious outlook on salary increases in 2017. Western Europe is projected to implement 2.7% median salary increases (2.6% average) in 2017. Greece is low at 2.0%, while Austria, Germany, Luxembourg, Norway, and the United Kingdom are high at 3.0%. Russia’s 2017 salary increases are projected at 8.0% and the Ukraine at 11.5%. Out of the eight countries reported for the Middle East, the 2017 median salary increase is 5.0% (5.7% average). Salary increases from 2016 to 2017 remain steady across the Middle East and North Africa for the countries reported, but the IMF reported a weakened outlook due to declines in oil prices, conflicts, and security risks. Asia Pacific The 15 Asia Pacific countries reported are projected to implement salary increases of 6.4% (average) and 5.8% (median) in 2017. Japan is low at 2.5%, and Pakistan is high at 11.5%. On the positive side, India’s IMF forecast is optimistic with strong growth, and we project 10.9% for 2017 salary increases with rising real incomes. The IMF confirms that the ASEAN-5 economies—Indonesia, Malaysia, Philippines, Thailand, and Vietnam—are also performing well. Find out how ERI’s cloud-based solutions can help you simplify global compensation planning This report was prepared by Linda L. Cox, CCP, ERI Compensation Project Manager, with research assistance from Katie Sebastian Please email Linda Cox, CCP, at linda.cox@erieri.com with questions or comments. Planning Global Compensation Budgets for 2017 ERI Economic Research Institute111 Academy DriveSuite 270Irvine, CA 92617 800.627.3697 erieri.com The 2017 projections indicate salary increase budgets throughout the majority of the world between 2.5% and 5.0%. High inflationary countries, such as Venezuela and Argentina, require close observation and action, as needed, to ensure up-to-date compensation programs. The loss of real income for employees in Venezuela, in particular, will be an important business issue. The cautious outlook by the IMF and the continuation of modest to moderate salary increase budgets reinforce multinational companies’ ability to attract and retain key employees within these budgets. In this uncertain environment, we continue to recommend that salary increase budgets be distributed to fully recognize high performance and retention of at-risk employees. Supplementing salary increase budgets with other human capital programs, such as training and development, performance management, succession planning, short- and long-term incentive compensation, and employee benefits, will support in recognizing, rewarding, and motivating key performers. 6 | ERI Economic Research Institute | Planning Global Compensation Budgets for 2017 | June 2016 Summary