Employers expect higher salary increases in 2015

Canadian employers are expecting salaries to rise by an average of 2.8% in 2015, according to Morneau Shepell’s annual survey of Compensation and Trends in Human Resources.

This is up slightly from the average 2.6% salary increase expected for 2014. The average includes expected salary freezes and excludes promotional or special salary adjustments.

“Employers are relatively optimistic about the coming year,” says Michel Dubé, a principal in Morneau Shepell’s compensation consulting practice. “Those expecting a significant increase in revenue, operating budgets and staffing outnumber those expecting decreases by four to one.”

The survey showed higher-than-average expected salary increases in a few sectors.

The mining and oil and gas sectors expect average increases of 3.4%, down from last year’s expected salary increases of 3.9%. Professional, scientific and technical services will also be higher than the national norms, at 3%, on average, reflecting increased competition for talent in this sector.

Lower-than-average increases are expected in certain industry groups that face more challenging economic circumstances. This includes wholesale and retail trade, where average salary increases of 2.4% are expected.

For employers with DB plans, about one-third indicated they would be reviewing plan design or employee cost-sharing; about one-quarter would be looking at whether they should convert to DC plans.

According to Phillips, “This underscores the need for governments to open the door for alternatives, such as target benefit plans, to help preserve many of the benefits of our current pension system for employers and their employees.”

Companies also identified a number of specific priorities, including improved mental health in the workplace. Workplace mental health is now the leading cause of sick leave and disability and is a growing concern in many companies. The survey finds that almost 50% of employers said they had mental health training for managers or were planning to implement training in the next 12 to 18 months.

To help fund training programs, organizations will also be looking for ways to reduce costs and be more efficient. Priorities include finding ways to reduce sick leave and disability costs, and reducing the cost of benefits and retirement plans.

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