At a time when unemployment is at near record lows, many sectors are struggling to find talent – and after a recent spike in inflation, too, it may seem like an opportune time to ask for a raise. But on the flip side, many firms have recently cut staff and the Canadian economy has begun to cool.
Such seemingly opposing market signals can make it difficult for Canadians to discern how much power they have at the bargaining table. While inflation adds pressure to negotiate for more, experts warn that asking for too much could backfire. That’s because in an uncertain economy employers may be more inclined to take a second or third-choice candidate who doesn’t demand as much money, while existing staff who negotiate for higher pay could be targeted in future layoffs if they fail to adequately prove their worth.
“This is where the confusion is happening, because on one hand people are confident and seeing robust opportunities out there, but at the same time companies are seeing [economic] pressures,” says Mike Shekhtman, regional director at staffing services firm Robert Half Canada.
According to a recent survey by Robert Half Canada, 83 per cent of workers are concerned about rising costs and interest rates, and 73 per cent are worried about the economy more broadly. At the same time only 42 per cent are concerned about their job security. As a result, 70 per cent are looking for a salary increase in 2023.
“As the job market becomes more balanced, being the same level of aggressive as you might have been nine months ago comes with a much higher risk,” says Andres Lares, the managing partner of Baltimore-based Shapiro Negotiations Institute, which provides negotiation training to Fortune 500 companies, professional athletes and sales teams. “You can still negotiate, but you need to be a little more prepared. You’ve got to be a little more strategic and you may want to be a bit less aggressive, unless you’ve got a lot of alternatives.”
Mr. Lares says as power shifts from the employees’ side, owing to the tight labour market, to a more balanced position between employer and employee, it becomes more important to come to salary negotiations well prepared. Specifically, he recommends engaging in a thorough examination of the job market and even seeking competitive offers.
“If you’d like to negotiate you might go out of your way to apply for a few other jobs that you might not want as much, but you think you’ll have a good chance of getting,” he says. “If nothing else, you can feel more confident having more alternatives, and that confidence will likely give you a better outcome.”
Those seeking higher compensation in this economy will need to justify their worth, says Mr. Lares, who advises not to wait until the subject of compensation arises to start communicating value.
“Negotiating doesn’t start when there’s an offer on the table, or the moment you talk about compensation directly; it’s part of the entire process,” he says. “You need to communicate why you’re worth more than the next candidate who wouldn’t require more money.”
Part of that preparation should also include a study of the employer’s performance and current financial standing, advises career coach Miriam Groom, the chief executive officer of Mindful Career. She says even in the worst economic climates, certain sectors, employers and roles remain in high demand, and it’s up to negotiators to determine just how strapped the other party really is.
“If they are increasing their prices and are not bringing that back to the employees then there’s an issue there,” she says. “If you’re at a large service firm – a lot of them are cutting costs, because they’re unable to close as much business – so if that’s happening, you know the kind of response you’ll get if you ask for a raise.”
Ms. Groom recommends expanding the scope of the negotiation beyond salary. Specifically, she says now is an opportune time to negotiate for perks that can save workers money today or help them earn more in the future at relatively little cost to their employers.
“You have to think about a lot of other things that are tied to [compensation], rather than the base number, because if someone requires you to get a car and go into work with the gas prices through the roof, you might make the same amount [working remotely at a lower salary level],” she said.
According to the Robert Half Canada survey, salary flexibility is the most desired non-salary perk, followed by job stability, positive work relationships, recognition and development opportunities. In fact, a previous Robert Half survey found that a quarter of Canadians would take a pay cut in order to work remotely full time, and another found that among Canadians who plan to switch jobs in 2023, career advancement was a primary motivator for 30 per cent.
“A lot of companies, they just can’t afford to raise salaries right now,” says Ms. Groom, “so consider the other things you can negotiate for.”