Microsoft won't give salary hikes to full-time workers, to rise rates for hourly workers

Microsoft Corp. has decided to freeze pay for all full-time workers this year to help it navigate macroeconomic ructions and investments in AI.

Microsoft Corp. has decided to freeze pay for all full-time workers this year to help it navigate macroeconomic ructions, becoming the latest US tech leader to tighten its belt during a time of mounting uncertainty.

Satya Nadella, chief executive officer of Microsoft Corp., speaks during an interview in Redmond, Washington, US, (Bloomberg)

Chief Executive Officer Satya Nadella explained in an internal memo the move as necessary to generate “enough yield” to invest in the major platform shift toward artificial intelligence. Microsoft had already raised compensation in 2022, he added. The company will, however, consider raising rates for hourly workers while maintaining a bonus and stock award program without “overfunding” it, Nadella said without elaborating.

“As a company we recognize that navigating both a dynamic economic environment and a major platform shift requires us to make critical decisions in how we invest in our people,” a company spokesperson said. Insider first reported on the pay freeze earlier on Wednesday.

Tech firms have downsized and slashed expenses globally to account for tepid consumer demand and shore up finances ahead of a potential recession. This year, Microsoft began cutting thousands of jobs, joining peers from Meta Platforms Inc. to Amazon.com Inc.

The software leader last month reported quarterly profit and sales that topped projections, and is making massive bets on AI. Those include a reported $10 billion of new investment into OpenAI and a Bing internet search chatbot — a strategy to juice future sales of Azure cloud services, search ads and office-productivity programs.

“As a senior leadership team, we don’t take this decision lightly, having considered it over several months,” Nadella said in his memo. “This year the economic conditions are very different across many dimensions, including customer demand, the labor market, and the investments required for the next cycle of innovation.”