Employees in line for 2.8 per cent pay raise in 2018: Survey

‘Most companies not under pressure to significantly increase salary budgets in near term’

Employees in line for 2.8 per cent pay raise in 2018: Survey
Canadian employees hoping for larger pay raises next year will have to wait a little longer, according to a survey of 312 companies by Willis Towers Watson.Shutterstock

Canadian employees hoping for larger pay raises next year will have to wait a little longer, according to a survey of 312 companies by Willis Towers Watson.

Canadian employers expect to hold the line on pay raises in 2018, while continuing to reward the best performers with significantly larger raises to retain these employees and strengthen the commitment to paying for performance, said the company.

Non-executive employee groups can expect a slightly higher base salary increase next year than what was granted or budgeted this year with 2.8 per cent increases (versus 2.7 per cent in 2017). Employers are also planning 2.8 per cent average salary increases for executives, compared to 2.9 per cent in 2017.

About 94 per cent of respondents are projecting base salary increases for some or all employee groups in 2018, slightly up from 90 per cent granting increases in 2016, found Willis Towers Watson.

Out of all the companies that granted no increase in 2016, only 11 per cent are still planning on maintaining a salary freeze in 2018. And in looking at the overall sample, only six per cent of respondents are projecting no increase in 2018, found the survey conducted between April and July.

“Most companies are not under pressure to significantly increase their salary budgets in the near term,” said Lucille Raikes, senior consultant, rewards, at Willis Towers Watson. “Companies are relying more on variable pay, such as annual incentives and discretionary bonuses, to recognize and reward their best performers. At the same time, they are rewarding star performers with substantially larger increases while granting minimal increases — if any — to their weakest performers.” 

Employers are rethinking how to administer limited salary budgets, said Sandra McLellan, Rewards practice leader, North America at Willis Towers Watson.

“Some organizations are moving away from differentiating increases based on an employee’s previous year’s performance altogether, while others are focusing on rewarding employees for skills development. So while organizations may be forecasting 2.8 per cent increases, the landscape of how and when they are giving increases varies considerably.”

 

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