Modest pay hikes predicted for 2005

Survey of organizations across Canada forecasts average wage hike of 3.3 per cent
||Last Updated: 10/13/2004

Canadian workers can expect pay hikes of 3.3 per cent in 2005, according to a national survey. That’s down 0.1 percentage points from 3.4 per cent in 2004.

Aon Consulting’s

2005 Canadian Pay Increase Survey

found that employee base-pay increases for 2005 will continue to be modest, ranging from 3.3 per cent to 3.6 per cent. When compared to scale increases forecasted for 2005 in the 2.5 per cent range, it indicates that employers are allowing only one per cent for performance increases.

“Slow business growth continues to effect employee pay increases and we will continue to see conservative pay administration practices across Canada in 2005,” said Phil Wallace, senior vice-president of compensation at Aon. “Such modest pay increase projections raise the possible question as to whether companies are appropriately using their salary administration programs effectively. Employees hired at salaries lower than the midpoint will need, at this pace, many years to reach the midpoint.”

Decline spread across the country

The survey saw a slight decline in the pay increases employees are predicted to see in all regions in Canada.

The most significant change is predicted in Western Canada where salary increases are forecast to drop from 3.7 per cent in 2004 to 3.4 per cent in 2005. This reduction is significant compared to other regions surveyed though Western Canada remains ahead of national average salary increases.

The survey was administered across Canada to 338 private- and public-sector companies, not-for-profit organizations and companies in manufacturing and non-manufacturing sectors. The results remain comparable across all sectors with private sector non-manufacturing leading the way with a projected average pay increase of 3.4 per cent.

Overall the variation between 2004 actual pay increase percentages and those forecast for 2005 are minimal. Executives, directors and managers show a slight decline in their salary increases. Employees below that level show a salary increase similar to 2004.

However, as in previous years, the trend continues for employees at the executive level to outpace other employees on the pay increase scale, further widening the gap between employee levels.

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