The sluggish economy has employers scaling back paycheck growth, with annual increases keeping just ahead of inflation, the Conference Board reported this week.

Budgets for salary increases this year have fallen below four percent, with 35 percent of 250 employers surveyed reporting a smaller money pool for executive and exempt employee pay raises than projected last year, the New York-based private research group said.

The survey also found that planned salary budgets for 2009 are set to grow by 3.75 percent for non-exempt employees, 3.8 percent for exempt and 3.9 percent for executives. With inflation expected to rise by 3.4 percent, most employers are budgeting for salary increases at a rate just ahead of inflation, the report said.

The lowest increases were reported in the trade industry, a trend that is expected to continue next year.