But salary freezes and regional variations have an impact
Salary increases could range from 2.3 per cent to three per cent in Canada in 2010, according to recent surveys from several HR consulting firms. But salary freezes could have a significant impact, along with regional differences.
A Hay Group survey indicates a national average salary increase of 2.3 per cent in 2010, much lower than the 2009 forecast of 3.7 per cent from last year's survey. But the prediction is identical to the 2.3 per cent average actual salary change that organizations realized in 2009, according to the survey of 500 Canadian employers.
"We’ve continued to experience symptoms of an overall weaker economic outlook, which last year was partially offset by the buoyancy of the energy sector in Alberta. The 2010 forecasts, however, do not include that energy sector optimism and, as a result, the forecasts are noticeably," said Karl Aboud, director of the Hay Group reward consulting practice.
Also notable is 15 per cent of respondents forecast an actual salary freeze for 2010, compared to only two per cent one year ago.
And while Saskatchewan (at 3.8 per cent) repeated as the province with the highest forecast, Newfoundland (3.5 per cent) and Manitoba (3.0 per cent) have replaced Alberta (2.6 per cent) as the next highest ranked provinces. The forecast for Quebec (2.5 per cent) is slightly above the national average, while Ontario (2.1 per cent) and British Columbia (1.9 per cent) are the only provinces with forecasts below the national average of 2.3 per cent.
Mining (at 3.7 per cent) is the sector projecting the highest average salary increase followed by utilities (at 3.2 per cent) and credit unions, hospitality and pharmaceutical (all at 3.0 per cent). The three sectors with the lowest projections for 2010 are media (0.9 per cent), forestry and paper (1.0 per cent) and telecommunications (1.4 per cent).
As Canadian employers searched for ways to manage costs, 2009 salary increase budgets were trimmed up to one per cent from forecasts made in 2008, with some employers implementing wage freezes for some, if not all employees, according to the 2009/2010 Salary Budget Survey Report from Watson Wyatt.
But for 2010, to 92.2 per cent of 106 employers surveyed have budgeted to increase salaries, up from 79.5 per cent in 2009 and 91.4 per cent in 2008. The average projected salary increase for 2010 is three per cent for those granting increases (2.7 per cent when factoring in projected wage freezes).
The cities expected to see the highest increase in 2010 are Saskatchewan and Vancouver, at 3.1 per cent, followed by Calgary at three per cent, Montreal, Greater Toronto and Winnipeg at 2.9 per cent and Nova Scotia at 2.8 per cent, according to Watson Wyatt.
The 2009/2010 Mercer Canadian Compensation Planning Survey is also predicting Canada should see a three-per-cent increase in salaries among those employers awarding increases.
Broken down by industry, the poll of 511 organizations forecasts a rise of 3.5 per cent for utilities, 3.3 per cent for natural resources, oil and gas and pharmaceutical, followed by 3.1 per cent for the public and not-for-profit sectors. Hospitality, entertainment, media and non-durable manufacturing are all expected to see a three-per-cent gain, while for-profit service and wholesale/retail should see 2.9 per cent. Durable manufacturing and insurance come in at 2.8 per cent, followed by high-tech and telecom at 2.7 per cent, transportation at 2.6 per cent and finance and investment at 2.5 per cent.
With the exception of salary increases, HR focus has dramatically shifted from “attract and retain” to “downsize and minimize labour costs,” according to Morneau Sobeco’s 27th Annual Compensation and Trends Projections Survey.
While 2009 has seen considerable wage freezes (35 to 40 per cent of survey respondents depending on the job category), fewer employers are anticipating freezing wages in 2010 (10 to 15 per cent depending on job category). Instead, employers are planning to review salary structures, job evaluation systems and incentive plans to better control compensation costs.
Overall employers are planning a salary increase of 2.5 per cent, found the Morneau Sobeco survey of 253 Canadian employers. But planned increases vary depending on the industry sector and even within sectors. The highest planned increases are in the public administration sector while the manufacturing and trade sectors are showing the lowest forecasts.
There are also marked differences across sectors, as Calgary respondents are anticipating the lowest salary increases (2.2 per cent) among major Canadian cities while Halifax predictions are amongst the highest (3.0 per cent).