Firms cautiously optimistic with projected 2013 salary increases: Survey

Focus on merit increases, pay for performance
|hrreporter.com|Last Updated: 09/28/2012

Average salary increases in 2013 will be 3.1 per cent across all employee groups and industries, according to Aon Hewitt’s 34th annual Canada Salary Increase Survey.

The survey, which looked at 422 employers between July and August, projects salary increases showing a slight improvement over the actual 2012 salary increases, which on average were three per cent.

"2013 salary increases are actually projected to range from 2.5 per cent for unionized employees to 3.3 per cent for managers and supervisors," said Suzanne Thomson, a senior associate atAon Hewitt in Toronto.

Projected 2013 salary increases in the manufacturing sector are between 3.1 per cent and 3.3 per cent for all employee groups, and the projected salary increase for unionized employees is 2.4 per cent.

In 2013, 3.3 per cent of organizations reported a salary freeze, while only 1.7 per cent are forecasting a freeze for 2013. The decline in organizations reporting a salary freeze mirrors trends witnessed prior to the economic downturn in the third quarter of 2008.

"The percentage of organizations reporting a salary freeze has steadily declined since 2009, when almost a third of organizations froze salaries", said Thomson.

Executive Group

Manager/
Supervisor

Professional/
Specialise

Admin Support

Hourly

Union

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

Manufacturing

3.4%

3.2%

3.3%

3.3%

3.3%

3.3%

3.2%

3.2%

3.0%

3.1%

2.4%

2.4%

Service

3.1%

3.1%

3.2%

3.2%

3.1%

3.1%

3.0%

3.0%

2.6%

2.7%

2.3%

2.6%

All Organizations

3.2%

3.2%

3.3%

3.3%

3.2%

3.2%

3.1%

3.1%

2.8%

2.9%

2.4%

2.5%


Note : 2012 data is actual, 2013 data is projected.

Changing in granting base salary increases
Some organizations have reported changes to their approach in granting base salary increases, according to the survey. Organizations are opting for approaches that focus on merit increases or pay for performance strategies. Others are granting more lump sum payments in lieu of increases or they are putting more pay at risk by increasing the variable pay component and reducing salary increases.

The survey also indicates 30 per cent of organizations use special compensation arrangements for hot skills jobs. The most popular monetary “hot skill” arrangements are additional base pay, sign-on bonuses and retention bonuses. Non-monetary arrangements to attract and retain those with “hot skills” include flexible work arrangements.

"Employee attraction and retention continue to be important issues in many sectors," said Susan Hunter, national leader of Aon Hewitt's rewards group. “Employers need to develop strategies to not only retain, but to engage their high performers.”

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