Pay raises to remain flat in 2019: survey

Canadian workers’ pay isn’t about to skyrocket, according to a new survey by Willis Towers Watson.

The survey found pay raises will likely remain at an average of 2.8 per cent for client management employees in 2019, the same rate as last year. The outlook is also flat, at 2.7 per cent, for employees in production and manual labour. Executives should see a slightly smaller increase, at 2.8 per cent, compared to the average 2.9 per cent pay raise they saw the year before. Management employees and business and technical support employees will also see an average 2.8 per cent raise. All averages are congruent with the historical raises for the last decade, which have hovered around three per cent, noted the survey.

Read: Location tops salary when employees consider job offers: survey

While there was exceptional growth in 2017 compared to 2016, 2018 showed only moderate growth from both employment and gross domestic product perspectives, according to the survey. It expects this slight trend downward to continue in 2019 due to stagnation in consumer spending and the overall aging of the Canadian population. A tighter perspective will likely lead to organizations rethinking their spending, the survey found.

“Most companies are not under pressure to significantly increase their salary budgets in the near term,” said Sandra McLellan, North America rewards business leader at Willis Towers Watson, in a press 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.”

One area where pay raises are seeing a bigger jump is as an incentive for exceptionally well-performing employees, noted the survey. It found these star performers are likely to see an average increase of 4.7 per cent in 2019, compared to the 2.4 per cent raise a worker with an average rating might receive.

Read: Executive compensation not as simple as higher salary, bonuses

Discretionary bonuses are an another are where this phenomenon pops up, the survey found. These bonuses will average 5.3 per cent of salary for professional and client management employees. Overall, the budget for awarding these bonuses is somewhat higher for next year, for most employee groups, although annual performance bonuses, usually tied to specific employee performance goals, will probably hold steady for 2019, according to the survey.

“A growing number of companies are coming to grips with the fact that employees are more willing to change companies to advance their careers and to talk openly about their pay,” said McLellan. “As a result, organizations are facing increased pressure entering next year to devise a focused strategy and plan on how to allocate their precious compensation dollars or risk losing some of their best talent.” 

Read: Salary increases to rise slightly in 2019: survey