Employers projecting average salary increase of 2.7 per cent in 2022
Employers are projecting an annual base salary increase average of 2.7 per cent, excluding salary freezes, in 2022, according to LifeWorks survey.
Including salary freezes, this number remains at 2.5 per cent, according to a report from LifeWorks.
The actual base salary increase projection for 2021 was 2.6 per cent excluding freezes, and 2.2 per cent when including freezes.
“Canadian employers are walking a tight line as they juggle and balance a number of factors when it comes to making decisions about their 2022 salary and workforce planning. A tight labour market has caused ‘the great resignation,’ which is forcing organizations to adjust pay levels by the highest percentage in the last five years,” says Anand Parsan, partner and national practice leader, compensation consulting, LifeWorks.
Only 3.3 per cent of organizations are projecting salary freezes next year, according to the survey of 829 organizations conducted between July and August 2021. This year, 12 per cent of Canadian organizations actually froze salaries.
Nearly one in five (18.3 per cent) of employers remain undecided on salary plans, down from 46 per cent in the 2020 survey.
Many U.S. employers are planning bigger pay raises for workers in 2022, according to a report from Willis Towers Watson released in July.
Among industries, wholesale trade (3.1 per cent), construction (3.0 per cent), accommodation and food services (3.0 per cent) and information technology (3.0 per cent) are projected to have the biggest salary increases, excluding salary freezes.
Meanwhile, health care and social assistance (2.0 per cent), educational services (2.0 per cent) and information and cultural industries (1.9 per cent) are projecting the lowest salary increases.
When including salary freezes, wholesale trade (3.0 per cent), construction (2.9 per cent), and professional, scientific and technical services (2.9 per cent) are expected to be the biggest gainers. Meanwhile, salary increases are lower in health care and social assistance (1.8 per cent), educational services (1.8 per cent) and information and cultural industries (1.5 per cent).
“Expected salary increases and declining freezes is a positive news story and one that Canadian employees should feel confident in as we look to the new year. We cannot, however, lose sight of the impending impact of the rising inflation rate,” says Guylaine Béliveau, principal, compensation consulting practice, LifeWorks. “Employee turnover needs to be a top consideration for employers, as employees may feel stretched financially.”
Retirement and resignations may have dropped over the pandemic, but both are beginning to climb back to pre-crisis levels, according to a report from RBC.
Issues like the shortage of qualified talent and troubles with attracting and retaining talent also put pressure on employers’ capacity to pay, says Béliveau, and so employers must “review their offerings to ensure they are providing competitive compensation, total rewards programs and wellbeing support”.