But Western dominance may be nearing end
Despite some challenges on the economic front, employers are demonstrating continued optimism in predicting salary increases for 2008, said Karl Aboud, national director of reward management at Hay Group in Toronto. The company’s annual salary survey (of 550 organizations in June and July) is forecasting an average increase of 3.8 per cent in base salary across the country.
That’s up 0.2 percentage points from last year’s prediction and the actual change in pay over the last 12 months was 0.5 percentage points higher than forecast, said Aboud.
“So even though you’ve got negative economic signals, the numbers are showing aggressive growth,” he said.
Various HR consulting firms have released salary forecasts for 2008 and predicted national increases range from 3.7 per cent to 3.9 per cent. Not surprisingly, Calgary is expected to see the biggest gains, ranging from 3.9 per cent to 5.2 per cent.
The Hay survey forecasts an increase of 4.9 per cent for Alberta, with Saskatchewan following at 4.6 per cent. However, trend analysis shows the growth numbers are not as strong as they used to be.
“Whether that signals the start of the beginning of the end, maybe,” said Aboud. “You’ve got to think the whole issue of ‘it can’t last forever’ that hit the rest of the world has got to hit Alberta.”
Nowadays, pay is not just a reflection of how much employers can afford if they want to stay competitive, he said.
“To the comp people, they now have to integrate what used to be just a numerical exercise with a demographic reality and make their employer understand it’s not just about ‘What we can afford,’ it’s about ‘What we can’t afford to do’ as well.”
Salary increases depend more than ever on the province of residence, according to Morneau Sobeco’s annual survey, which predicts an average salary increase of 3.7 per cent.
After reaching a five-year high last year, increases are expected to stabilize across most of Canada, said the 335 organizations responding. The highest gains are reported for Alberta, from 4.3 per cent for operation and production staff to 5.6 per cent for executives. One-third of participants in Western Canada are looking to significantly boost staff levels in 2008, in contrast to just 10 per cent of those in Central Canada.
According to Hewitt Associates, the huge salary increases in Alberta have many employers (45 per cent) finding it a challenge to maintain the market competitiveness of pay levels. In Calgary, employees saw average gains of 5.3 per cent in 2007, the same as 2006, and for next year employers predict a rise of 5.2 per cent.
But Kerry Humber, a senior consultant with Hewitt in Toronto, said he’s heard of people turning down work in Calgary because “when they look at the equation, it’s not that attractive to them. Salaries are higher but you’ve also got to look at cost of living.”
Conducted in the summer with 314 respondents, Hewitt’s survey projected salary increases of 3.8 per cent in 2008, the same as 2007.
But among employers offering broad-based incentive plans, actual payments were above target payments.
“So while the increases are meaningful, they’re more than the cost of living so there are real wage gains in there,” said Humber. “But also when you look at the packaging with variable pay in there, that’s good news. Plans have been paid out above target level.”
The WorldatWork Salary Budget Survey of 2,500 organizations in the United States and Canada predicts a salary budget increase of 3.9 per cent in 2008 in Canada, down slightly from four per cent in 2007.
Mercer Human Resource Consulting predicts the same increase, at 3.9 per cent for 2008. The results of the survey of 491 organizations are largely as expected, said Iain Morris, a principal at Mercer in Toronto, though one standout is the gap between projected numbers for 2007 (3.7 per cent) and actual increases (4.1 per cent).
“Given the history of these surveys, generally the projections and the actual increases tend to be very close together,” said Morris.
Much of that is explained by the West, where oil and gas and petrochemical industries are projecting a 6.2-per-cent increase. Take Alberta out of the equation and the projected national average salary increase is closer to 3.5 per cent.
Also of interest is pay for performance and, in particular, the differentiation reported.
“There’s not a big shift year over year but there’s still a significant difference in the kinds of salary increases the highest level of performer would get,” said Morris.
Overall, organizations said 10 per cent of their workforce was at the highest level, with an average pay increase of 6.5 per cent, while the lowest level of performance was about six per cent of the workforce, with an average increase of 2.3 per cent.
“That suggests there’s still a bit of a notion that cost of living is something employers factor in to making pay adjustments even though a lot of them would communicate it’s all about merit,” said Morris.
Wage increases
Salary budget forecasts for 2008
Average wage increases across the country will range from 3.7 per cent to 3.9 per cent, according to five salary surveys for 2008.
*Executives/operations and production staff
That’s up 0.2 percentage points from last year’s prediction and the actual change in pay over the last 12 months was 0.5 percentage points higher than forecast, said Aboud.
“So even though you’ve got negative economic signals, the numbers are showing aggressive growth,” he said.
Various HR consulting firms have released salary forecasts for 2008 and predicted national increases range from 3.7 per cent to 3.9 per cent. Not surprisingly, Calgary is expected to see the biggest gains, ranging from 3.9 per cent to 5.2 per cent.
The Hay survey forecasts an increase of 4.9 per cent for Alberta, with Saskatchewan following at 4.6 per cent. However, trend analysis shows the growth numbers are not as strong as they used to be.
“Whether that signals the start of the beginning of the end, maybe,” said Aboud. “You’ve got to think the whole issue of ‘it can’t last forever’ that hit the rest of the world has got to hit Alberta.”
Nowadays, pay is not just a reflection of how much employers can afford if they want to stay competitive, he said.
“To the comp people, they now have to integrate what used to be just a numerical exercise with a demographic reality and make their employer understand it’s not just about ‘What we can afford,’ it’s about ‘What we can’t afford to do’ as well.”
Salary increases depend more than ever on the province of residence, according to Morneau Sobeco’s annual survey, which predicts an average salary increase of 3.7 per cent.
After reaching a five-year high last year, increases are expected to stabilize across most of Canada, said the 335 organizations responding. The highest gains are reported for Alberta, from 4.3 per cent for operation and production staff to 5.6 per cent for executives. One-third of participants in Western Canada are looking to significantly boost staff levels in 2008, in contrast to just 10 per cent of those in Central Canada.
According to Hewitt Associates, the huge salary increases in Alberta have many employers (45 per cent) finding it a challenge to maintain the market competitiveness of pay levels. In Calgary, employees saw average gains of 5.3 per cent in 2007, the same as 2006, and for next year employers predict a rise of 5.2 per cent.
But Kerry Humber, a senior consultant with Hewitt in Toronto, said he’s heard of people turning down work in Calgary because “when they look at the equation, it’s not that attractive to them. Salaries are higher but you’ve also got to look at cost of living.”
Conducted in the summer with 314 respondents, Hewitt’s survey projected salary increases of 3.8 per cent in 2008, the same as 2007.
But among employers offering broad-based incentive plans, actual payments were above target payments.
“So while the increases are meaningful, they’re more than the cost of living so there are real wage gains in there,” said Humber. “But also when you look at the packaging with variable pay in there, that’s good news. Plans have been paid out above target level.”
The WorldatWork Salary Budget Survey of 2,500 organizations in the United States and Canada predicts a salary budget increase of 3.9 per cent in 2008 in Canada, down slightly from four per cent in 2007.
Mercer Human Resource Consulting predicts the same increase, at 3.9 per cent for 2008. The results of the survey of 491 organizations are largely as expected, said Iain Morris, a principal at Mercer in Toronto, though one standout is the gap between projected numbers for 2007 (3.7 per cent) and actual increases (4.1 per cent).
“Given the history of these surveys, generally the projections and the actual increases tend to be very close together,” said Morris.
Much of that is explained by the West, where oil and gas and petrochemical industries are projecting a 6.2-per-cent increase. Take Alberta out of the equation and the projected national average salary increase is closer to 3.5 per cent.
Also of interest is pay for performance and, in particular, the differentiation reported.
“There’s not a big shift year over year but there’s still a significant difference in the kinds of salary increases the highest level of performer would get,” said Morris.
Overall, organizations said 10 per cent of their workforce was at the highest level, with an average pay increase of 6.5 per cent, while the lowest level of performance was about six per cent of the workforce, with an average increase of 2.3 per cent.
“That suggests there’s still a bit of a notion that cost of living is something employers factor in to making pay adjustments even though a lot of them would communicate it’s all about merit,” said Morris.
Wage increases
Salary budget forecasts for 2008
Average wage increases across the country will range from 3.7 per cent to 3.9 per cent, according to five salary surveys for 2008.
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*Executives/operations and production staff
