‘We need to be thinking about wages and support systems that truly get workers to a place where they feel able to thrive’
While increasing wages is posing a significant challenge for employers, it is a critical retention tool, according to one expert.
“Higher wages mean a higher cost for employers, and it is a tight economy,” says Nora Jenkins Townson, founder of the HR consultancy Bright + Early, in conversation with Canadian HR Reporter. “But they’re also critical for retention, especially if you’re in an industry where the labour market is tight and turnover is always quite expensive.”
Townson says that wage increases should not be viewed solely as a compliance issue or a burden to be managed. Instead, they are an opportunity for employers to differentiate themselves and build stronger, more loyal teams.
“If you want to pay more of a living wage—which the minimum wage doesn’t even reach even after tying it to inflation—you can do things like that incrementally,” she says. “It’s also important to explain to staff what your philosophy on compensation is and how it works and how the different steps to increases at your company work. Because when they have that information, it just really builds a lot of trust.”
About one in three (32 per cent) Canadian companies say mandatory minimum wage hikes result in increased salaries/wages across the entire company, according to a previous report.
Wage increases and inflation
But Townson cautions that simply tying wage increases to inflation is not enough to address the real challenges facing Canadian workers.
“Rental inflation increased by 4.8 per cent in September. In a lot of major cities like Toronto, for example, rent has increased over 70 per cent between pre-pandemic 2019 to 2025. So inflation isn’t covering the full picture. And things like housing and childcare and other expenses, they often rise faster than general inflation.”
She notes that flexibility—whether through remote or hybrid work options—can be a powerful tool for attracting and retaining employees, especially those with caregiving responsibilities.
“It doesn’t mean that productivity goes down. It just allows people to fit their work into their schedule a little bit more. And on that same note, I would encourage, when organisations can, to stick to or offer remote or hybrid options. You’re going to have access to a wider talent pool, and offering that flexibility is a wonderful benefit to attract and retain people beyond remuneration.”
Many workers are calling for more flexibility, better office experiences, and stronger support for wellbeing, according to an earlier report.
Focusing on living wages
The economic pressures facing employers are real, and Townson acknowledges that many are struggling to balance rising wage costs with other business challenges. She recommends that organisations develop clearer frameworks for performance and output.
“Having much clearer frameworks for what good performance and what good output looks like… has a ripple effect in a few positive directions,” she says. “If we’re airtight and clear on that, it’s more productive for the organisation. So everybody’s working in alignment.”
Ultimately, Townson believes that focusing on financial wellness is not just the right thing to do, but a strategic imperative for employers.
“Minimum wage is really like the legal floor. It keeps people from falling below a certain threshold, but it doesn’t guarantee that they can build a stable life,” she says. “If we focus more on a living wage or a human-first workplace, we get the best version of the folks that we have invested in hiring.”
