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Lower salary increases ahead

Wednesday February 18, 2015 Written by  The Conference Board of Canada
Against a backdrop of falling oil prices and regional economic uncertainty, many Canadian organizations have lowered their projections for 2015 salary increases.

According to new data released by The Conference Board of Canada, the average base salary increase for non-unionized workers is now expected to come in at 2.7 per cent, down from the 2.9 per cent projected in the summer of 2014.

"Many organizations are waiting to see how the economy fares before finalizing plans. It is likely that we will see further reductions in salary increases, including pay freezes, from organizations in Alberta and Saskatchewan. Energy companies are scaling back on their capital investments, and this is affecting contingent workforce needs and pay decisions," said Ian Cullwick, vice-president of leadership and human resources research with The Conference Board of Canada. "The next few months will be challenging for employers as they balance the need to retain top talent with affordability."

Other key findings from the report include:

  • Planned average base salary increases for non-unionized employees in 2015 are down slightly from the 2.9 per cent forecasted in the summer of 2014, to 2.7 per cent as noted in the December 2014/early January 2015 updated forecast.
  • Continued reductions to projected pay increases in the energy sector are expected.
  • Less than half of all respondents have finalized their projected 2015 pay plans.

As of December 2014, employers in Saskatchewan and Alberta were still projecting average salary increases of 3.4 per cent and 3.3 per cent respectively, though both will likely see further downward revisions as the year unfolds. Salary growth projections for most provinces have been revised slightly downward. Ontario is the only region whose projection is still in line with its summer forecast, at 2.5 per cent for 2015.

Organizations in the retail and wholesale trade sectors are expecting the lowest increases at 2.3 per cent, followed by education, health, and communications, both at 2.4 per cent.  With the exception of the communications and telecommunications sector, all industries are at or below their summer projections.

The 2015 Mid-Year Pulse Check survey was sent out in December 2014 to all 382 organizations that responded to The Conference Board of Canada's Compensation Planning Outlook 2015 survey (conducted over the summer of 2014). A total of 228 organizations replied to the mid-year survey, representing a response rate of 60 per cent.

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