Canadian salaries expected to rise despite global economic woes

The global economy may be in for a bumpy ride, but Canadian workers can still expect modest pay hikes in the coming year.

Employees will see average salary increases of 3.1 per cent next year, the Conference Board of Canada said in its compensation outlook Tuesday. That is similar to the 3-per-cent gain last year and slightly higher than the 2.7-per-cent raise in 2010.

It is, however, well short of pre-recession levels – in 2008, projected non-unionized base pay increases averaged 4.2 per cent. An "uncertain economic climate" is making employers cautious about hefty raises, the report said.

Employers are "optimistic, but guarded, in the midst of a turbulent global outlook and higher-than-normal economic risk," said Karla Thorpe, director of leadership and human resources research.

The outlook on pay differs by region. Employers in Saskatchewan are the most upbeat, with projected increases of 3.9 per cent, while Alberta is next at 3.6 per cent. Ontario and Atlantic Canada are expected to have the lowest base pay increases, at 2.7 per cent next year.

Among sectors, the oil and gas industry has the highest anticipated raise, at 4.3 per cent, followed by natural resources. The lowest increases are expected in retail trade, at 2.4 per cent.

Increases in the private sector will likely outstrip public sector pay hikes. The average projected raise in the private sector is 3.2 per cent compared with 2.6 per cent for public sector workers.

Unionized staff will see lower increases. Anticipated wage increases for unionized employees are projected to be 2 per cent next year – 1.5 per cent in the public sector and 2.3 per cent in the private sector.

The results are based on responses of 381 organizations to a survey conducted this summer.

The 3.1-per-cent average increase is well above the expected rate of inflation, which the Bank of Canada projects will ebb to about 1 per cent by the middle of next year.

Almost a quarter, or 23 per cent of compensation planners, expect their work force will expand next year, while just 6 per cent see reductions.

Last year, 88 per cent of employees in the survey received a salary increase, up from 82 per cent in 2010.