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Moderate salary increases in 2015

Wednesday November 19, 2014 Written by 
In response to Canada's sluggish economic growth, organizations are planning moderate base salary increases for 2015.

The average pay increase for non-unionized employees is projected to be 2.9 per cent next year. That's one percentage point higher than the forecasted inflation rate for 2015, according to The Conference Board of Canada's Compensation Planning Outlook 2015.

“The good news is that most Canadian organizations are planning salary increases for 2015. However, employers remain cautious about Canada’s economic performance and are opting for the same modest wage increases seen in the past few years,” said Ian Cullwick, vice-president of leadership and human resources research with the Conference Board of Canada.

Salary increases vary considerably depending on region and industry. Once again, Saskatchewan and Alberta employers will lead the nation with projected average increases of 3.6 per cent and 3.5 per cent, respectively.

The lowest average increases are expected in the Atlantic provinces (2.3 per cent) and Ontario (2.5 per cent).

By industry, the highest average increase is expected to be in the oil and gas sector, while the health sector will have the lowest average increases (3.9 per cent and 2.2 per cent, respectively).

Recruitment and retention challenges

Sixty-four per cent of organizations say they are experiencing difficulty recruiting and retaining employees this year, up from 58 per cent in the previous year.

This number is much higher in Saskatchewan and Alberta, where 85 per cent and 78 per cent of organizations, respectively, struggle to attract and retain talent.

Although more organizations are starting to report challenges recruiting and retaining employees, we’re still not back up to pre-recession levels, when close to three-quarters of organizations experienced difficulty in this area,” said Cullwick.

Labour market pressure is highest in the health sector, where 82 per cent of organizations are facing challenges recruiting and retaining staff. This is significantly higher than last year when only 46 per cent of health organizations reported difficulties.

Incentive pay common

Short-term incentive pay practices are widely used across most industry sectors to drive individual performance. In 2014, payouts were 11 per cent of total base pay spending, versus a planned target of 10.8 per cent.

In 2015, organizations expect to spend 10.7 per cent of total base pay on short-term incentive pay.

The Compensation Planning Outlook summarizes the results of the Conference Board's annual compensation survey and forecast, conducted in June 2014. The findings are based on the responses of 382 organizations across Canada.

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