While Canadian employers recognize the value of retirement benefits, the current high inflation environment is driving them to favour wage hikes instead, according to a new survey by the Healthcare of Ontario Pension Plan and Angus Reid Group.

The survey, which polled nearly 800 business owners and senior leaders, found employers’ leading concerns are greater competition for hiring (82 per cent), employee burnout (79 per cent), labour shortages (79 per cent) and high turnover (77 per cent). A strong majority (82 per cent) are also worried about inflation.

In addressing these issues, the majority of employers are currently favouring wage increases over benefits enhancements as the best way to mitigate the effects of inflation for employees (67 per cent) and as a means to attract new employees (71 per cent).

Read: Employers adjusting benefits, compensation amid inflation, labour shortage: survey

“Current inflationary pressures are understandably leading many employers and workers to prioritize cash in hand, even as they recognize the short- and long-term value of retirement benefits,” said Steven McCormick, senior vice-president of plan operations at the HOOPP, in a press release. “It is arguably more important than ever for leaders — in business, government and the retirement industry — to take measures that will help workers save for retirement, even when it’s challenging to do so.” 

Employers reporting improved productivity are significantly more likely to favour benefits over cash in fighting inflationary pressures and recruiting new talent, compared to those with worsening productivity (45 per cent compared to 31 per cent). This group is also twice as likely to be optimistic about maintaining employee morale (81 per cent compared to 40 per cent), retaining current talent (80 per cent compared to 43 per cent) and recruiting new talent (76 per cent compared to 38 per cent). 

Among all respondents, 66 per cent said retirement benefits help retain talent and 62 per cent said they help recruit talent. Most also said retirement benefits are a cost-effective way to reduce financial stress for employees (85 per cent) and are more of an investment in human capital than a cost to business (78 per cent). 

Read: How employers can tweak benefits offerings amid rising inflation

In addition, nearly a fifth (17 per cent) of respondents said they’ve launched or enhanced retirement savings plans in the past year or plan to do so in the year ahead.

However, the majority (84 per cent) of employers said they’re concerned about an emerging retirement income crisis and 75 per cent felt they have a responsibility to offer a pension to employees. There was also agreement that governments have a role to play, with 87 per cent saying governments can save money by supporting more affordable and efficient pensions. 

“While it is understandable that raising wages is a quicker fix for immediate current economic challenges, there is also widespread understanding of the power of pensions,” said McCormick. “And it’s encouraging to see there are some employers that are prioritizing retirement benefits as a way of supporting staff.” 

Read: Half of U.S. employees say they’ve stopped or reduced retirement savings amid rising inflation: survey