Microsoft won’t give salaried employees raises this year

Microsoft is skipping raises for salaried employees this year. In an internal memo obtained by The Verge, Microsoft CEO Satya Nadella told employees that only hourly workers will receive raises and blamed the move on the uncertain state of the economy.

“We are clear that we are helping drive a major platform shift in this new era of AI, and doing so in a dynamic, competitive environment while also facing global macroeconomic uncertainties,” Nadella wrote. “We must maintain a leadership position in our at-scale businesses of today, generating enough yield to invest and lead in the next wave, while staying on the frontiers of both performance and efficiency.”

While Microsoft will still offer salaried employees bonuses and stock awards, Nadella explains that the company will not “overfund to the extent” it did last year and that it will instead bring its spending more in line with previous years. Nadella adds that the senior leadership team, including himself, won’t get salary increases, either. They’ll also receive lower annual performance-based bonuses.

Earlier this year, Microsoft announced layoffs affecting 10,000 workers across the company and laid off its entire AI ethics and society team. The rocky economy still isn’t stopping Microsoft from turning up the dial on its efforts to become a front-runner in the AI industry, though. It made a multibillion-dollar investment into OpenAI in January and continues to build out its Bing chatbot, along with its AI Copilot tool for Microsoft Office.