Increased use of separate promotional budgets to supplement salaries
Canadian employers plan to hold the line on budgeted pay raises in 2020, despite low unemployment, a tight labour market and volatility in the economy, according to Willis Towers Watson Data Services.
Salary budgets are not expected to change but virtually all companies (94 per cent) plan to give raises next year, the same percentage as 2019; however, 26 per cent are reporting separate promotional budgets in efforts to supplement employee salaries — a 35 per cent increase over last year.
"Despite an extremely tight labour market, most employers are either not willing or fiscally unable to increase their fixed costs across-the-board by bolstering their salary budgets," says Amanda Voegeli, practice leader for Canadian rewards at Willis Towers Watson in Toronto. "Instead, many companies are doubling down on providing significantly larger market adjustments to employees in high-skill roles and selective pay raises to their top performers.”
Companies are budgeting slightly smaller increases for executives (2.4 per cent in 2020 versus 2.6 per cent this year) and management employees (2.7 per cent in 2020 versus 2.8 per cent this year), found the survey of 384 companies.
But employers continue to reward star performers with significantly larger pay raises than average-performing employees, said Willis Towers Watson. Employees with the highest possible rating were granted an average increase of 4.9 per cent this year — 88 per cent higher than the 2.6 per cent increase given to those with an average rating.
Salary increases are expected to hold steady for technical and business support employees (2.7 per cent) as well as production and manual labour employees (2.3 per cent in both years), found the survey.
Professional and client management employees may receive a slightly lower increase next year (2.7 per cent in 2020 versus 2.8 per cent this year.
Canadian organizations are slowly starting to increase transparency with employees as it relates to their pay, found Willis Towers Watson. Currently, 24 per cent of organizations have a pay transparency policy in place. About one-third fully share an employee's relative position within their current pay grade, while a similar percentage share the employee's pay range.
Fewer employers fully disclose pay ranges above an employee's current grade or all pay range data (15 per cent and 14 per cent, respectively), found the survey. And only 58 per cent of employers planning to implement a pay transparency policy are willing to share in full, or upon request, all pay ranges.