Average salary increases of 2.9 per cent in 2014: Aon Hewitt

2.6 per cent forecasting freezes, down from 3.1 per cent

Average salary increases of 2.9 per cent are expected in 2014 across all employee groups and industries in Canada, according to Aon Hewitt’s Salary Increase Survey.

The projected salary increases are expected to show no change over the actual 2013 salary increases, which on average were also 2.9 per cent, found the survey of 464 employers, including 254 service organizations and 210 manufacturing organizations.

“Salary increases for 2014 are projected to range from 2.3 per cent for manual workforce employees in service organizations to 2.9 per cent for executive, management and professional staff in manufacturing,” said Suzanne Thomson, senior consultant for performance, reward and talent at Aon Hewitt.

“Projected 2014 salary increases in the manufacturing sector are between 2.8 per cent and 2.9 per cent for all employee groups with the exception of manual workforce employees where the projected salary increase is 2.5 per cent.”

Overall salary increase budget: Canada top executive/sr. mgmt.

Middle management

Junior mgmt./prof./ supv.

Clerical/ admin./tech.

Manual workforce

All employees

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

Manufacturing

3.0%

2.9%

2.9%

2.9%

2.9%

2.9%

2.9%

2.8%

2.5%

2.5%

3.0%

3.0%

Service

2.7%

2.8%

2.8%

2.9%

2.8%

2.8%

2.7%

2.8%

2.2%

2.3%

2.8%

2.8%

All arganizations

2.9%

2.9%

2.8%

2.9%

2.8%

2.9%

2.8%

2.8%

2.4%

2.4%

2.9%

2.9%

Among respondents, 2.6 per cent are forecasting a freeze for 2014, down from 3.1 per cent of organizations that reported a freeze in 2013.

Around the world

Before accounting for inflation, expected Canadian salary increases for 2014 are among the lowest in the world, according to Aon Hewitt’s global Salary Increase Survey of more than 12,890 employers in 120 countries. Average increases range from six per cent in the Middle East to three per cent for North America as a whole.

Canadians are in the middle of the pack after inflation with an average increase of 1.5 per cent, compared with a range of a 2.1 per cent increase in Asia and a one per cent decrease in real terms in Africa.

Globally, projected salary spending for 2014 is expected to fluctuate based on the continued global economic and political uncertainty.

Salary increases will vary by region in 2014. After adjusting increases for inflation, workers in Europe and North America are projected to see salary increases at 1.6 per cent and 1.7 per cent respectively after factoring in inflation, up from one per cent and 1.1 per cent in 2013. Salary increases for workers in Latin America are projected to be flat, while workers in Asia Pacific, Africa and the Middle East will see decreases.

“Due to ongoing economic challenges in many regions around the world, companies are remaining conservative with their compensation budgets,” said Yanina Koliren, global compensation surveys and solutions leader at Aon Hewitt. “Salaries are increasing, but inflation plays a key factor in whether employees see an impact on their paychecks. This year, improved interest rates in multiple regions mean good news for many employees around the world.”

As companies continue to be conservative with compensation budgets, a growing number continue to use variable pay programs — or performance-based awards that must be re-earned each year — to attract, engage and reward high-performing employees. Eighty-one per cent of companies around the world offered some form of variable pay program in 2013, said Aon Hewitt.

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