Canadian employees can expect another modest pay increase in 2018, according to a new survey by Willis Towers Watson.

The survey, which polled more than 300 Canadian employers, found the vast majority (94 per cent) are projecting base salary increases for some or all employee groups in 2018, up slightly from 90 per cent in 2016. Employers expect to award base increases of 2.8 per cent to both executive and non-executive employees next year.

While pay increases are likely to remain modest in 2018, the survey found that among respondents that granted no increase in 2016, only 11 per cent are still planning to maintain a salary freeze in 2018.

Read: Pay increases to stagnate in 2017: survey

“Employers are rethinking how to administer limited salary budgets. Some organizations are moving away from differentiating increases based on an employee’s previous year’s performance altogether, while others are focusing on rewarding employees for skills development,” said Sandra McLellan, rewards practice leader for North America at Willis Towers Watson. “So while organizations may be forecasting 2.8 per cent increases, the landscape of how and when they are giving increases varies considerably.”

The survey projects annual performance bonuses, typically based on company and employee performance goals, will likely remain the same or increase slightly in 2018 for most employee groups.

“Most companies are not under pressure to significantly increase their salary budgets in the near term,” said Lucille Raikes, a senior consultant for rewards at Willis Towers Watson, in a news release. “Companies are relying more on variable pay, such as annual incentives and discretionary bonuses, to recognize and reward their best performers.

“At the same time, they are rewarding star performers with substantially larger increases while granting minimal increases — if any — to their weakest performers.”

Read: Ontario caps salary and performance pay for public sector executives

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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