Employer confidence strong but salary increases conservative: Survey

One-half forecasting increase of less than three per cent in 2018
|hrreporter.com|Last Updated: 12/06/2017
Compensation, payroll
A man cycles past the International Civil Aviation Organization (ICAO) headquarters building in Montreal on June 15. REUTERS/Christinne Muschi

While employer confidence is back to pre-recession levels, employers are still being conservative when it comes to salary increases, according to the Hays Canada Salary Guide.

“The dark days of the downturn are a fading memory for most of Canada’s employers, but our research shows they’re staring down the barrel of extreme retention challenges,” said Rowan O’Grady, president of Hays Canada.

“When the economy and job markets are strong, employee tolerance for not getting what they expect drops considerably. Frankly, employees have already told us they are ready to be lured away. All the warning signs are there and those who refuse to acknowledge this reality are taking their biggest risk in at least five years.”

Employer confidence

Employer confidence is back to pre-recession levels and nearly three-quarters (70 per cent) said their growth prospects look good for the year to come, found the survey of more than 3,500 employers. Even employers in the parts of Canada hardest hit by the recent oil and gas slump expressed optimism about the strengthening economy, found Hays.

Quebec employers are most confident of the regions, with 50 per cent saying the economy is strengthening. Despite taking the biggest hit from the oil and gas downturn, Alberta employers are equally confident in the economy as those in Ontario, with 44 per cent saying it will strengthen next year. Sitting in the middle is British Columbia, where 46 per cent of employers said the economy was strengthening, matching national confidence levels.

The factor having the biggest impact on business is the strengthening Canadian dollar, with 35 per cent of Canadians saying it is having a positive effect on their outlook. The area having the biggest negative effect is global political uncertainty, with 36 per cent saying it is negatively impacting their business outlook.

Compensation outlook

Since 2012, the proportion of employers offering compensation increases of more than three per cent has dropped from 45 per cent to 24 per cent in 2017, while those keeping salaries the same has more than doubled, reaching 25 per cent in 2017, found Hays.

Salary increases of less than three per cent, in line with inflation, have remained relatively stable over the past five years, with 52 per cent of employers expecting to offer this level of salary increase in 2018.

Forty-seven per cent fewer employers increased salaries more than three per cent in 2017 compared to 2012.

For 2018, seven per cent of employers are planning average salary increases of five per cent or more; 17 per cent are predicting an increase between three per cent and 4.9 per cent; 52 per cent are forecasting an increase of less than three per cent; and 22 per cent expect levels will remain the same, found the survey.

Staffing plans

More than one-third (38 per cent) of respondents across the country plan to add permanent headcount in 2018, compared to 35 per cent in 2017.  

Hiring was strong in B.C., Quebec and Ontario, found Hays. While Alberta’s hiring was 23 per cent lower than the other main regions, it was a 50 per cent increase on last year’s growth, and 28 per cent higher than predicted.

Looking ahead, Alberta employer confidence is returning, with their hiring expectation for next year just 14 per cent behind the national average.

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Comments (1)

VP human resources012/6/2017 3:30:12 PMIt sounds like employers are being optimistic with the Canadian economy, with a substantial number of employers offering an increase of two per cent or more as well as adding permanent headcount. So, the minimum wage increase for 2018 and 2019 won't have an impact? When surveying employers, were smaller companies included?