Approximately seven per cent of Canadian companies plan to freeze salaries in 2021, according to a new survey by Normandin Beaudry.
It found that while fewer organizations plan to freeze salaries this year compared to last summer (when more than 20 per cent of respondents planned a freeze), the number is still higher than pre-coronavirus pandemic levels, when just three per cent of companies had opted out of salary increases.
Although more than 10 per cent of manufacturing companies surveyed last summer planned to freeze salaries, the survey found those plans have been abandoned, indicating some degree of confidence in the economic outlook and organizations’ willingness to remain competitive in their market.
And while 16 per cent of organizations with 50 to 100 employees expect a freeze this year (compared to four per cent in July), that number is almost double (30 per cent) among companies with less than 50 employees.
By comparison, the salary increase forecast across Canada is expected to be 2.6 per cent (excluding freezes), similar to last summer’s forecast of 2.7 per cent. The slight decrease is partly due to the fact that approximately 35 per cent of organizations expect to allocate a budget less than what was initially planned. Among companies to be positively impacted by the pandemic, less than one per cent expect to implement a freeze this year.
For organizations with 50 to 100 employees that plan to grant salary increases, the budgets are aligned with the national average (2.6 per cent) or slightly higher for organizations with fewer than 50 employees (2.8 per cent).
In addition to salary freezes, more than 25 per cent of organizations expect not to pay any bonuses in 2021, mainly due to 2020 financial results not meeting set objectives. For companies that plan to pay bonuses, close to half will make payments that are less than 20 per cent of the target bonus, while 25 per cent will pay equivalent amounts to more than 80 per cent of the target amount. A fifth (20 per cent) of organizations that offer bonuses plan to review their programs.