Employers expected to play it safe in 2011

Increases to average pay of 2.8 per cent, with highs in Saskatchewan, Alberta
|Canadian Payroll Reporter|Last Updated: 11/16/2010

Workers and businesses will have to be patient going into 2011 as an unsteady economic recovery will mean moderate pay increases, according to a Conference Board of Canada report.

Increases for non-unionized employees are expected to average 2.8 per cent, said the Compensation Planning Outlook survey of 384 organizations.

“Things are not quite back to business as usual for compensation planners. The economic recovery is still unsteady and burdened by risks from abroad,” said Karla Thorpe, associate director of compensation and industrial relations at the Conference Board. “Workers cannot yet expect strong wage gains, and businesses have been slow to see improvements in corporate balance sheets.”

In recent years, the public sector has outpaced the private sector in base-pay salary increases but this trend is expected to reverse in 2011, with private sector employers planning increases of 2.9 per cent, compared to 2.3 per cent in the public sector (including the public service, agencies and Crown corporations, municipalities, hospitals and schools).

Projected increases are highest in the oil and gas industry, at an average of 3.6 per cent, compared to those in natural resources (excluding oil and gas) and construction industries (both 3.5 per cent). The lowest increases — 1.4 per cent on average — are expected in the education and health sectors.

Saskatchewan workers can look forward to the highest average gains in Canada, at 3.6 per cent, followed by Alberta (3.1 per cent), while Ontario will see the lowest, at 2.6 per cent.

In 2010, 82 per cent of employees received a salary increase, up from 65 per cent in 2009, found the survey.

Most of the respondents (84 per cent) have at least one short-term incentive pay plan in place (92 per cent in the private sector, 66 per cent in the public sector). Cash bonuses or incentive plans are by far the most popular, used by 87 per cent of organizations, compared to profit-sharing (12 per cent), gain-sharing (seven per cent) and team-based incentives (six per cent), said Compensation Planning Outlook 2011: Playing it Safe in the Face of an Unsteady Economic Recovery.

Similar to 2009, the percentage of organizations having difficulty recruiting or retaining particular skills remains lower than in past years, at 53 per cent, compared to 74 per cent in 2008. Labour market pressures in Alberta continue to ease, with staffing difficulties reported by only 45 per cent in 2010 compared to 61 per cent in 2009 and 89 per cent in 2008. But in Manitoba, 71 per cent reported having difficulty with retention and recruitment, found the Conference Board.

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