Employers plan to reduce 2009 pay increases: Survey

 The economic slowdown is making many employers reconsider their planned salary increases for 2009, according to a new survey.

The survey by HR consulting firm Morneau Sobeco found of the 168 employers surveyed, 81 (48 per cent) will decrease their planned pay increases for non-union employees by at least one-half of a percentage point.

Another 14 per cent plan to freeze 2009 pay across the board.

Among the 81 respondents who indicated pay increases would be lower, 63 per cent planned to apply the reduction to all non-union employees across the organization. Another nine per cent planned to apply it only at certain job levels and 27 per cent indicated the impact would vary on a person-by-person basis. The remaining one per cent planned to apply the reduction only in certain office locations or provinces.

“The survey results show different responses to the ongoing financial crisis by companies in different regions and industry sectors," said Andre Sauvé, compensation partner in Morneau Sobeco’s Montreal office.

The results by region were interesting. Only 41 per cent of the Ontario employers said there was no significant change to their planned 2009 pay increases compared with 77 per cent of Atlantic Canada employers, 51 per cent in Quebec and 56 per cent in Western Canada.

Part of this regional difference may reflect the larger manufacturing sector in Ontario, which appears to be the hardest hit. Forty-five per cent of employers in the manufacturing sector plan to adjust pay increases downwards by 1.5 per cent or more compared with only 13 per cent of employers in the finance and insurance sector and 14 per cent in the public sector.