Salary increases drop to 2.9 per cent: Conference Board

Newest figure represents a one-percentage-point decline from the summer

Canadian organizations are reacting swiftly to the recent downturn in the Canadian economy by decreasing their projected salary increases, according to a recent report.

The Conference Board of Canada's Compensation Planning Outlook winter update found expected average salary increases for 2009 have dropped from a projection of 3.9 per cent in the summer to 2.9 per cent in December. However, with total inflation expected to be at 0.7 per cent in 2009, workers can still expect to receive increases that will outpace inflation.

The Conference Board surveyed 220 organizations in December, all of which had been surveyed in the summer, to uncover what effect the deteriorating economic climate has had on salary increases for 2009.

For non-union employees, planned salary increases for 2009 have dropped a full percentage point, from 3.9 per cent to 2.9 per cent. In the private sector, expected increases have dropped from 3.9 to 2.9 per cent. In the public sector, planned increases have dropped from 3.9 to 3.1 per cent.

For unionized employees, the overall projected 2009 average wage increase has dropped one-half a percentage point from 3.2 to 2.7 per cent. The drop is larger in the public sector, where unionized employees are expected to average increases of 2.6 per cent, down from the 3.5 per cent reported in the summer. Private sector unionized employees are expected to gain 2.9 per cent, down from 3.1 per cent.

By employee group, the greatest declines in average increases are seen at the senior executive and executive levels. Since the summer, average increases for these groups have dropped from 4.1 to 2.8 per cent.

Increases in the oil and gas industry have dropped from 5.4 to 4.4 per cent, but the industry continues to have the highest planned increases.

Alberta, Saskatchewan, and Manitoba continue to exceed the average increase of 2.9 per cent; organizations in the rest of Canada are planning increases that fall below the average.

While less than one per cent of organizations anticipated an overall freeze on salary budgets in the summer, a full 10 per cent now expect to freeze salary budgets in 2009.

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