Average salary increase projected at 2.8 per cent for 2012: Morneau Shepell

Highest increases expected in mining, oil, gas, lowest in public administration
|hrreporter.com|Last Updated: 08/25/2011

Despite the prevailing uncertainty in the global economic outlook, the average salary increase for 2012 is expected to be 2.8 per cent, according to Morneau Shepell’s compensation survey.

Employers are optimistic about growth and profitability in their organizations for 2012, with one out of four expecting significant growth in revenues and profitability, found the Compensation and Trends Projections Survey, which polled 250 organizations across Canada.

Only a minority of respondents anticipate significant shortfalls. The 2012 average salary budget increase is comparable to 2011, increasing from two per cent to 3.5 per cent overall.

This is the first time in a decade that the average salary budget increase is lower than the prevailing inflation, found the survey.

The benchmark organizations are mostly from the manufacturing (27 per cent), services (23 per cent) and finance (16 per cent) industries. The average salary budget increases in these industries are 2.6 per cent, 2.7 per cent and 3.2 per cent, respectively. The mining and oil and gas extraction sector respondents are projecting the highest budgeted increases (3.4 per cent on average) and the public administration sector is expecting the lowest (two per cent on average).

Employers have been active in the last couple of years to introduce various measures that would rein in escalating costs of their benefits program. They plan to be equally keen in 2012, found the survey. Employers are also anticipating implementing preventive measures, such as health promotion initiatives, in order to better control future costs.

Employers with defined benefit (DB) pension plans are planning to continue to implement various de-risking techniques in the face of heightened market volatility.

For sponsors of defined contribution (DC) pension plans, they anticipate continuing to streamline and simplify their funds offering and introduce new funds to address the requirement of providing a reasonable return without too much risk.

Recruitment and retention are the top HR priorities for 2012, according to survey respondents. While employers are recognizing the negative impact on productivity resulting from absenteeism and mental health problems, more than one-third of survey respondents were unable to identify the main cause of short-term disabilities (STD) in their organization.

Mental health issues were by far the number one cause preventing employees from being actively at work. More and more organizations are hiring experts to deal with these complex cases and are proactively training supervisors so they can recognize mental health issues early and minimize the organizational and personal impact.

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