‘Employers remain focused on enhancing productivity and mitigating risk’: Aon
Although the Canadian economy has been growing strongly and unemployment is low, employees should not expect significantly higher salary increases for 2018, according to Aon’s 2017/2018 Canadian Salary Planning report
Base pay is projected to rise by 2.8 per cent in 2018, up slightly from the average actual compensation increase (including salary freezes and pay cuts) in 2017 of 2.7 per cent, found the survey of 378 companies.
Only 1.9 per cent of respondents froze salaries in 2017, down from 2016 (4.5 per cent), and fewer expected salary freezes in 2018 (0.9 per cent).
“What we see in the Canadian data is similar to trends in other countries during this long, slow recovery,” said Yanina Koliren, global compensation surveys and solutions leader at Aon Hewitt. “You might expect strong growth in employment and GDP growth to create a tight labour market and therefore significantly higher pay, but the reality is that employers remain focused on enhancing productivity and mitigating risk. That’s reflected in the modest pay increase expectations.”
Variable pay
Spending on variable pay is expected to be 12.2 per cent of payroll, down slightly from actual variable pay allocations in 2017, found the survey.
Eighty-five per cent of surveyed companies have variable pay and bonus plans; top performers on average received an increase in 2017 of 4.3 per cent, compared with 2.7 per cent across all performance tiers.
While the salary data remain subdued in Canada, they have recovered substantially from the depths of the oil shock two years ago, according to Suzanne Thomson, senior consultant, global data solutions, at Aon Hewitt.
“We’re seeing fewer salary freezes, as well as a continuing commitment to variable pay, which allows employers to attract, retain and award top performers. Our survey shows clearly that performance – more than any other factor – is the key driver of pay decisions at Canadian companies.”
Sectors
• Sectors in which employees can expect higher-than-average increase include engineering, mining and professional services (all at 3.3 per cent), as well as automotive (3.1 per cent) and forest and paper products (3.1 per cent).
• Lower-than-average increases are expected in energy and health care (2.5 per cent), as well as telecom (2.3 per cent).
• The oil and gas sector appears to be more optimistic this year, said Aon, reporting a 2.5 per cent increase, up from 1.2 per cent reported in 2016.
