Google's 23,000 employees around the world will each get a 10 per cent pay rise in the new year, the latest move in what the internet giant has called "a war for talent" in the technology industry.
The company, which makes profits at a rate of $1m (£624,000) per hour, announced the pay rise in an email to staff, which said staff would also get a holiday bonus of $1,000 this year.
Executives are fretting that too many talented software engineers and other staff are leaving the company for rivals such as Facebook and smaller start-ups. By some estimates, more than 10 per cent of Facebook's employees are former Google staff.
"We believe we have the best employees in the world. Period. The brightest, most capable group of this size ever assembled," Eric Schmidt, Google's chief executive, said in the message to staff. "We want to make sure that you feel rewarded for your hard work. We want to continue to attract the best people to Google."
Last month, the company's chief financial officer, Patrick Pichette, said the technology industry warned analysts to expect further upward pressure on staff costs over the next 18 months. The company is engaged in a "war for talent" which is "out of sync with what's happening in the rest of the economy", he said.
The company, along with five other technology firms, also recently settled a Department of Justice competition investigation and promised to end "no poaching" agreements on staff. Google is hiring at a faster pace than at any time in the past two years, and added 1,500 staff in the three months to the end of September, a 7 per cent increase since June.