Global Talent #52

Brought to you by Lundi: we design, hire, and run international teams.

🔥 Opening Shot

Comp season is opening, and the number is already decided. US salary budgets will land around 3.6 percent next year. That is the fourth straight year the number has refused to rise. The UK came in at 3.7. Whatever your comp team is planning, your competitors are planning the same thing.

I have sat through those planning cycles. The debate runs for weeks, consumes the whole leadership team, and moves the final answer by twenty basis points. Nobody in the room asks the one question with real leverage in it: why does this role need to sit in this market at all?

The same week those surveys landed, the UK reported a full year of shrinking payrolls while private sector pay still climbed 2.9 percent. That is the trap of a stalled market. Hiring pauses. Cost pressure does not.

A merit budget moves your cost of talent by tenths of a percent. Deciding where a team lives moves it by half. And unlike the merit budget, that decision compounds: the right city gives you deeper benches, lower attrition, and an operation you can eventually own outright.

When every company pays the same 3.6 percent, pay stops being a strategy. The merit budget is a rounding error. The map is the raise.

This Week's Number: 3.6% — US salary increase budgets projected for 2027, the fourth consecutive year without an increase (WorldatWork, July 2026).

📌 On the Radar

1. Pay budgets have flatlined. Everyone's.
WorldatWork's 53rd annual Salary Budget Survey, released July 15 with data from 1,799 organizations, projects US salary increase budgets of 3.6% for 2027, the fourth consecutive year without a higher projection. WTW's survey, released the same day, came in at 3.4%. Of 24 countries surveyed, twenty projected 2027 budgets at or below this year's actuals, and in 20 of 24 the median organization budgets at or below the average. The outliers are telling: Mexico projects 5.0%, with Poland and Vietnam higher still.

When everyone pays the same increase, compensation stops differentiating anyone. You cannot out-pay the market at 3.6 percent, and you cannot retain your way out of a bidding war for the same local talent. Meanwhile the fine print says wages in the best international markets are growing at 5 to 9 percent, which means the arbitrage window narrows every year on its own. That is exactly why the case for building abroad was never price alone. Price erodes. Access to talent and ownership of the operation are what compound. Companies that went abroad for the discount are renegotiating every year; companies that went abroad for the bench are still there.

2. The UK has been shedding payrolls for a year. Pay costs kept climbing anyway.
The ONS July labour market release shows payrolled employees down 85,000 year over year to May, with the June flash estimate down another 71,000 on the year to 30.3 million. Vacancies fell again to 712,000, unemployment sits at 4.9%, and yet private sector regular pay still grew 2.9%, with real pay growth of just 0.3%. Fewer jobs, falling vacancies, rising pay bills.

A market that cuts heads while pay costs rise does not have a demand problem. It has a cost-structure problem. UK employers absorbed a payroll-tax increase and responded the only way a fixed org design allows: delete the role. But most of those roles did not stop being needed; they stopped being affordable in one specific geography. The better question for a UK COO is not "can we afford this team" but "where should this team be." Keep the judgment layer at home, build the operating layer where the same budget buys a deeper bench, and structure it so you end up owning it. Starting with an employment partner is the right first step. Employment is half the job; the other half is running and eventually owning the team.

3. Brussels moved the AI goalposts. Both directions at once.
The EU Council gave final approval on June 29 to the Digital Omnibus on AI. The high-risk obligations that were due to bite on August 2, 2026 (days from now) are pushed to December 2, 2027 for stand-alone systems and August 2028 for AI embedded in products. Recruitment screening, performance evaluation, and workforce monitoring tools are squarely in that high-risk category. But one deadline moved up: the grace period for labeling AI-generated content was cut from six months to three, landing December 2, 2026.

A deferral is not a reprieve. If your hiring stack screens EU candidates or your tooling monitors EU-based employees, the obligations (human oversight, worker notification, logging) are still coming, and they now arrive with seventeen months of runway instead of five days of panic. The operators who win compliance windows treat them the same way every time: build as if the original deadline stood, and let the extension be margin rather than luck. When your team spans borders, someone has to own the compliance stack. Structure beats hope, and it beats deadline extensions too.

📊 Chart of the Week

Caption: Actual mean US salary increase budgets 2022–2026 and the 2027 projection. Source: WorldatWork 2026–2027 Salary Budget Survey, released July 15, 2026.

The post-pandemic pay surge is over: from a 4.4% peak in 2023, budgets have stepped down to 3.6% and stopped moving. WorldatWork calls it "a new equilibrium," and that is the strategic point. When the raise pool is fixed and identical across competitors, the differentiating decisions move elsewhere: which roles you keep, which you rebuild, and above all where you build them. The compensation lever left with real range is geography.

🚀 One More Thing

If your 2027 planning is already circling the same 3.6 percent as everyone else's, try bringing me the org chart instead of the merit matrix. Book a strategy session and we will look at which parts of the team actually need to sit where they sit, and what the honest cost delta would be. No pitch. Just insight from someone who has been there.

📖 New here? My book, Winning the Global Talent War, is the full playbook behind this newsletter.