TORONTO, ON, September 28, 2021 — Pay raises are making a comeback. Canadian companies plan to give employees larger raises next year as they recover from the economic fallout from the pandemic and face mounting challenges attracting and retaining employees, according to a new survey by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company. The survey also found employers are continuing to recognize their high performers with significantly larger raises.
The 2021 Salary Budget Planning Survey – Canada July Edition found only 4% of companies are not planning to boost salaries next year, a drop from 11% that didn’t give raises this year. Notably, raises are returning to pre-pandemic levels. According to the survey, companies project average salary increases of 2.7% for executives, management and professional employees, and support staff in 2022. This is up from the average 2.3% increases companies granted to these employee groups this year. Production and manual labor employees are in line to receive average increases of 2.6% next year, higher than the average 2.2% increases this year. Salary increases hovered slightly below 3.0% for the past decade until the pandemic forced companies to trim budgets. The larger raises coincide with a surge in demand for labour and a shortage of supply of hourly workers and specific professional roles with premium skills.
Among industries projecting the highest average increases, retail and wholesale companies come in at 2.9%, followed by manufacturing companies and business and technical consulting services companies at 2.8%. Transportation and financial services companies are budgeting similar salary increases for employees, averaging 2.7%. Oil and gas companies are projecting the lowest increases, averaging 2.1% — but that represents a significant increase from the 0.9% average granted this year.
“Companies are between a rock and a hard place when it comes to compensation planning,” said John Hammond, Canada Rewards practice leader at Willis Towers Watson. “On the one hand, employers need to continue effectively managing fixed costs as they rebound from the pandemic. On the other hand, companies recognize they need to boost compensation with sign-on, referral and retention bonuses; skill premiums; midyear adjustments; or pay raises. Or they can utilize all of these options, especially with thousands of Canadians quitting their jobs, changing careers or postponing looking for employment.”
The survey found companies continue to reward top performers with significantly larger pay raises than average-performing employees. Management and professional employees receiving the highest possible performance rating were granted an average increase of 4.4% this year, 83% higher than the 2.4% increases granted to those receiving average ratings. This trend is similar for support staff and production/manual labour employees.
“Attracting and retaining employees remains a major challenge for employers.”
John Hammond,
Canada Rewards practice leader
“Attracting and retaining employees remains a major challenge for employers. In fact, the current environment makes these challenges even more difficult. Employers need to deliver a sound employee value proposition supported by comprehensive Total Rewards programs. Beyond competitive salaries, which are table stakes at the moment, companies also need to focus their spend on a diverse set of health, wealth and career programs to drive employee engagement,” said Hammond.
The 2021 Salary Budget Planning Survey – Canada July Edition was conducted by Willis Towers Watson Data Services between May and June 2021. A total of 686 companies representing a cross section of industries participated. The report provides data on actual salary budget and merit increase percentages for the current year, along with projected increases for next year.
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.
