Canadian employers plan to hold the line on budgeted pay raises in 2020, according to a new survey by Willis Towers Watson.
It found employers are expecting no changes to their salary budgets in 2020, with salary increases projected to hold steady for technical and business support employees (2.7 per cent), as well as for workers in production and manual labour (2.3 per cent).
Professional and client management employees could see a slightly lower increase next year, 2.7 per cent in 2020 compared 2.8 per cent in 2019, while companies are budgeting slightly smaller increases for executives (2.4 per cent compared to 2.6 per cent) and management employees (2.7 per cent compared to 2.8 per cent).
However, some employers are projecting slightly larger annual bonuses next year, and 26 per cent of organizations are reporting separate promotional budgets in efforts to supplement employee salaries, an increase from last year’s survey.
“Despite an extremely tight labour market, most employers are either not willing or fiscally unable to increase their fixed costs across-the-board by bolstering their salary budgets,” said Amanda Voegeli, practice leader of Canadian rewards at Willis Towers Watson, in a press release. “Instead, many companies are doubling down on providing significantly larger market adjustments to employees in high-skill roles and selective pay raises to their top performers.”
Annual performance bonuses, generally tied to company and employee performance goals, are projected to increase slightly for most employee groups in 2020, noted the survey, which also found employers are expecting their discretionary bonuses to average 3.3 per cent of salary for professional and client management employees, slightly higher than last year.
“While most companies are keeping their salary budgets steady, we are also seeing companies getting creative with base pay beyond the traditional annual merit increase,” said Voegeli. “For instance, some employers are carving out increase pools for their high-potential and top-performing employees, setting aside premium pay for highly valued skills, considering ‘market adjustments’ for critical segments and providing more frequent increases outside of the annual cycle for in-demand jobs.”