Strong wage increases predicted across Canada, despite slowed economic growth
Employers in Canada are expecting base salaries to rise by an average of 2.7 per cent in 2020, according to Morneau Shepell.
This is an increase from the actual 2.6 per cent average increase in 2019.
The 2020 Salary Projection Survey includes increases in salary structure, length of service, cost of living and merit pay, and excludes salary freezes and promotional adjustments.
"While the Canadian economy is projected to see slowed growth in the coming year, we're expecting to see continued wage increases as a result of the tightening labour market," says Anand Parsan, vice-president of the compensation consulting practice.
"Employers are optimistic about the anticipated growth in 2020. We have seen a steady rise in projected base salary increases over the past few years, with actual numbers equal to or above our forecast since 2017."
The increase is higher than the projected rate of inflation for the year, said Morneau Shepell, citing the Bank of Canada’s note in July that consumer price index inflation is expected to rise to about two per cent by the end of 2020. And the Canadian economy is projected to grow by just 1.4 per cent in 2019, according to the bank.
Employers in Newfoundland and Labrador are expecting the highest annual salary increases, at 3.1 per cent, found the survey of 506 employers.
In 2019, British Columbia and Alberta led the country in expected salary increases, said Morneau Shepell, but for 2020, B.C. employers are expecting salary increases of 2.8 per cent, while employers in Alberta, Ontario and Quebec expect salaries to increase 2.7 per cent. Salary expectations in other provinces range from 2.5 to 2.9 per cent.
"As the war for talent continues and employees become more comfortable negotiating higher salaries and benefits, it's critical that employers design robust compensation strategies to remain competitive," says Parsan.
"We have seen that the most successful employers are those who support the financial, mental, physical and social well-being of their people. By keeping employees healthy and happy, employers are well positioned to improve productivity and make a positive impact on the organization's bottom line."