Salary Increases will Remain Slow Next Year – Especially in Ontario

A new survey of the Conference Board of Canada projects that due to the unsteady economic recovery, organizations are planning moderate base pay increases in 2011. Non-union employees are expected to see average increases of 2.8% in base pay. Increases in the private sector will be larger than those in public sector – but will vary significantly between different industries and between provinces. Ontario will see the lowest rate of increases in Canada.

“Things are not quite back to business as usual for compensation planners. The economic recovery is still unsteady and burdened by risks from abroad,” according to Karla Thorpe, the Board’s Associate director, Compensation and Industrial Relations. “The next year will require patience on the part of workers and businesses. Workers cannot yet expect strong wage gains, and businesses have been slow to see improvements in corporate balance sheets.”

In recent years the public sector has had greater gains in base-pay salary increases. This trend should reverse in 2011. Private sector employers are planning increases of 2.9% compared to 2.3% in the public sector.

The oil and gas industries are expected to have the highest gains at 3.6% in 2011. The natural resources and construction industries are very close at 3.5%. At the other end of the scale, the education and health sectors are expected to have the lowest increases at 1.4%.

Across the provinces, Saskatchewan can look forward to the highest increases at 3.6%, followed by Alberta at 3.1 %. Ontario can expect the lowest average base pay increase at 2.6%.

Less than 3% of respondents (all public sector organizations) are planning to freeze salaries across the board in contrast to last year, where 6% of respondents to the survey reported a freeze in salaries in all employee groups.

Almost all respondents have employee pension plans in place. The public sector spends an average of 9.8% of annual payroll for non-unionized employees. The private sector spends slightly less at 7.4%.

81% of organizations in the public sector are offering defined benefit pension plans as opposed to 45% in the private sector. 60% of organizations in the private sector offer defined contribution pension plans.

More details can be found on the web site of the Conference Board of Canada at: http://www.conferenceboard.ca/press/newsrelease/10-10-26/Tepid_Economic_Recovery_Limits_Salary_Gains_In_2011.aspx