Canadian employers continue to have a “cautious and conservative outlook” when it comes to salary increases — despite pressures to retain and motivate employees, according to a survey by Accompass (formerly Pal Benefits).
Increases projected for 2015 sit at 2.79 per cent, in line with the 2.74 per cent increase projected last year, found the September survey of 401 organizations, with the majority based in Ontario, Alberta and British Columbia.
“I would really emphasize the words ‘staying the course,’” said Steven Osiel, vice-president of total compensation at Accompass in Toronto.
“(With) 2014 moving into 2015, neither seems to be a banner year nor a bad year — it’s almost a moving forward. We’re out of the recession, we know we’re doing better but all the evidence isn’t pointing to excitement yet in that — but you see little nuggets, nuances of movement that is going to take us there.”
Those nuances include salary freezes, which appear to be stabilizing at eight per cent, the same as was projected for 2014, and close to the nine per cent projected in 2013. And more companies are planning an increase of two per cent or more compared to last year — 43 per cent will be giving raises in the 2.6 to three per cent range, found the survey.
“You see the confidence in terms of where the position is against market, there’s more insecurity. So more people think that they’re at or below market competitiveness. That insecurity means they feel they have to pay more, so there’s that sense of compensation or pay levels are becoming important again,” he said.
Two-thirds (64 per cent) of respondents believe their pay is on par with other organizations, found Accompass.
“Although Canadian companies are telling us that benchmarking and market position analysis are the top compensation priority, it’s interesting that the most important factor when finalizing the annual merit budget is actually internal budget constraints,” said Osiel.
But if the numbers are looked at a different way, these forecasts may not be having the expected impact. In working with the Toronto Region Board of Trade, Accompass did year-over-year analysis of more than 200 actual positions — not market movement. And they found there has been no movement whatsoever, he said.
“It looks like those employees who have stayed at organizations are getting increases between 2.5 and 3.5 (per cent), as per all the surveys, but because there has been some turnover in the market and some jobs that are now being refilled after all these years of recession and we’re now moving in the direction of fully filling up again, some of those positions are being hired at a lower rate. So those lower-rate jobs combined with those who have stayed meant it overall negated that overall 2.5, 2.8 per cent increase.”
If, for an example, an HR manager making $80,000 leaves a company, the person replacing her would not receive $82,000, as per the salary increase forecasts, but $80,000.
“As there’s more turnover, as there’s more confidence moving forward in the Canadian economy, the U.S. economy, new HR managers and all positions will be demanding more money again but, right now, the security of having a job is more important than the difference in pay,” said Osiel.
Canada’s projected average salary increase for 2015 is forecast at 3.16 per cent, according to a survey by the Wynford Group in
Calgary. That compares to an actual increase of 3.21 per cent for 2014.
The survey’s outlook is rosier than others, said Gail Evans, president of the Wynford Group.
“We have a slightly different perspective to some of the other major comp companies because we sit in Alberta and Alberta, of course, has an oil and gas practice,” she said. “Our numbers are probably slightly higher because our perspective is from this centre of the earth.”
The east and west coasts are leading the way in Canada, with the Atlantic seeing increased activity in shipbuilding contracts and British Columbia’s Kitimat region expecting a boost in shipping terminals, said Evans.
“The two coasts are the hot spots, other than Alberta. Saskatchewan is moving along and there’s still lots of action there but I think it’s levelling out. They were doing such a big catchup for so long, their rates are actually getting closer.”
Alberta is expected to see gains of 3.29 per cent and British Columbia is predicting 3.18 per cent, while Saskatchewan is at 3.23 per cent, found the survey of more than 230 employers from May to July.
The Atlantic is predicting 3.2 per cent followed by Manitoba at 3.17 per cent, Ontario at 3.14 per cent and Quebec at 2.94 per cent, found the Wynford Group.
“Alberta is leading the charge… although there is some trepidation in some areas about the tar sands because of the gluts with the pipelines, so oil is now going out on trains,” she said.
“There is the recognition that Alberta’s oil industry or energy industry is now the economic driver in Canada… Whenever there is activity here, there certainly is also spreading up the walls in other parts of the country, so that’s a good thing.”
Broken down by industry, energy is leading the way, with predictions of 3.78 per cent, followed by construction at 3.43 per cent, engineering/project and construction management at 3.4 per cent, and engineering at 3.33 per cent.
“There’s still some really, really heavy competition in anything to do with the oil industry, and the biggest employers are not the oil companies, it’s those service sector guys and construction guys,” said Evans.
Advanced technology, at 3.27 per cent, and IT services, at 3.25 per cent come next, while the industries seeing the lowest predictions include not-for-profit, at 2.98 per cent, retail, at 2.73 per cent, and the public sector, at one per cent.
The largest expected gains in starting salaries among professional occupations are in technology, according to a survey by Robert Half. Overall, base compensation for IT professionals in Canada is expected to increase 5.2 per cent in the coming year.
That’s a slight dip from the forecast of 5.5 per cent last year, said Dianne Hunnam-Jones, district president for Robert Half Canada in Toronto. Mobile, security and big data will be three drivers of technology hiring in 2015 and mobile applications developers can expect the biggest gains among all tech roles.
“Every company’s worried about their Internet and their IT security and big data is becoming a huge, huge focus in many companies — how do they harness the information they’ve gathered over the years, make sense of it for their business strategy? So that is definitely driving demand for hiring in the technology arena,” she said.
Overall, starting salaries for professional occupations are projected to go up an average of 3.7 per cent next year, found Robert Half, whose results are based on the company’s placements and contracts, along with surveys of hiring managers.
“Based on what’s going on from a macro-economic standpoint, we know our unemployment rate sits in Canada around seven per cent but in all of these professional occupational sectors, the unemployment rate sits much lower — sometimes it’s half of what the national average is, so just the pure supply of these people in the professional occupations is pushing up, because it’s so low, the supply, and the demand is outstripping (supply),” said Hunnam-Jones.
Creative and marketing, and accounting and finance professionals can expect starting salaries to rise an average of 3.9 and 3.4 per cent respectively, according to the survey.
“The regulatory environment just continues to drive hiring in the risk compliance and audit areas,” she said.
In the legal field, starting salaries are anticipated to rise 2.6 per cent, with mid- and senior-level lawyers popular in high-growth areas such as litigation, general business, commercial law and intellectual property.
Starting salaries for administrative professionals should see gains of 3.3 per cent, with a continued need for support staff in health care, HR and customer service.
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