Salary projections sober after volatile 2009

Unionized workers looking at average 2.1 per cent in 2010
By Gordon Sova
||Last Updated: 02/19/2010

Cautious optimism is the best way to describe the current series of wage increase projections being released. With the recovery still very tentative, companies are taking their time deciding on how much to raise wages and salaries this year.

Such prudence is called for. In 2009, according to Towers Perrin (now Towers Watson), half of companies ended up freezing salaries, though few expected to do so in January. This year, 11 per cent expect to freeze salaries overall, with this increasing to 18 per cent for executive salaries.

The Towers Perrin survey finds salaries will increase an average of 2.5 per cent in 2010, with the majority of bonuses either smaller than in 2009 or nonexistent.

At 70 per cent, the number of companies concerned about retaining talent as hiring picks up is high. Raises (55 per cent), bonuses (21 per cent), cash retention awards (29 per cent) and stock (25 per cent) are the most popular tactics.

The Conference Board of Canada’s Compensation Outlook was also released in December. Not surprisingly, it finds that 2009 raises did not meet expectations. For non-union employees in all groups, the actual was 2.4 per cent versus a projection of 4.2 per cent. This actual ranges from 2.1 per cent for production and 2.2 per cent for executives, senior executives and skilled trades to 2.4 per cent for managers and non-technical professionals. The 2010 projections call for a 2.7 per cent increase on average, with production at 2.5 per cent, clerical, skilled, executive and senior executive at 2.6 per cent, and managers and professionals at 2.7 per cent.

For unionized workers in 2010, the Conference Board is predicting an average wage increase of 2.1 per cent, down from an actual of 2.7 per cent in 2009 and from the projected 2009 average of 3.2 per cent. Public sector workers can expect 2.3 per cent, down from 3.1 per cent in 2009. In the private sector, the projection is 2.0 per cent, down from 2.4.

Four per cent of respondents, up from none, expect a work stoppage in the coming year and 81 per cent, down from 86 per cent, do not. The top three union negotiation issues are wages, job security and benefits. For employers, they are wages, productivity and flexibility. The 2010 union top three are unchanged (with two and three interchanged), as are management’s. Not surprisingly, business competitiveness has moved up from number 12 to number nine for unions and up from number six to number four for companies.

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