Modest economic growth limits salary gains in 2015: Conference Board

More employers having trouble recruiting, retaining
|hrreporter.com|Last Updated: 10/30/2014

Canadian organizations are planning moderate base salary increases for 2015 in response to Canada's sluggish economic growth, according to the Conference Board of Canada.

The average pay increase for non-unionized employees is projected to be 2.9 per cent next year, one percentage point higher than the forecasted inflation rate for 2015, according to Compensation Planning Outlook 2015.

"The good news is that most Canadian organizations are planning salary increases for 2015. However, employers remain cautious about Canada's economic performance and are opting for the same modest wage increases seen in the past few years," said Ian Cullwick, vice-president of leadership and human resources research at the Conference Board of Canada.

Once again, Saskatchewan and Alberta employers will lead the nation with projected average increases of 3.6 per cent and 3.5 per cent, respectively. The lowest average increases are expected in the Atlantic provinces, at 2.3 per cent, followed by Ontario, at 2.5 per cent.

By industry, the highest average increase is expected to be in the oil and gas, sector, at 3.9 per cent, while the health sector will have the lowest average increases, at 2.2 per cent, found the survey of 382 organizations.

"Although more organizations are starting to report challenges recruiting and retaining employees, we're still not back up to pre-recession levels, when close to three-quarters of organizations experienced difficulty in this area," said Cullwick.

Sixty-four per cent of employers said they are experiencing difficulty recruiting and retaining employees this year, up from 58 per cent in the previous year. This number is much higher in Saskatchewan and Alberta, where 85 per cent and 78 per cent of organizations, respectively, struggle to attract and retain talent. Labour market pressure is highest in health sector where 82 per cent of organizations are facing challenges recruiting and retaining staff. This is significantly higher than last year when only 46 per cent of health organizations reported difficulties.

Short-term incentive pay practices are widely used across most industry sectors to drive individual performance, said the Conference Board. In 2014, payouts were 11 per cent of total base pay spending versus a planned target of 10.8 per cent. Similar to what was planned for last year, organizations expect to spend 10.7 per cent of total base pay on short-term incentive pay.

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