Salary increases for 2013 expected across Canada
Annual employee salary increases are a reflection of, among other things, the overall economy, geographic location, industry type and specific business performance.
While we’re yet to feel the full effects of the looming workforce shortages, employers are anticipated to give modest salary increases for 2013, according to the Conference Board of Canada’s Compensation Outlook for 2013.
(NOTE: Salary increases in 2011 and 2012 were 2.6% and 3.1% respectively.)
Assuming no significant hiccups to the global economy, the good news is that the unemployment rate is expected to dip in 2014, while labour supply shortages will re-emerge over the medium-term.
Economic growth is expected to accelerate somewhat around the world next year. “It is apparent that the labour market is tightening, especially in Western Canada and in the natural resources and professional, scientific, and technical services industries,” said Karla Thorpe, Director, Leadership and Human Resources Research.
As an employer, what can you expect for salary increases in 2013?
One of the major factors influencing salary increase is the Cost-of-Living Index (the cost of maintaining a certain standard of living), which ties in to the Consumer Price Index (the price of a typical basket of goods). Together these affect the Cost of Living Adjustment or “COLA” (periodic salary increase to compensate for loss in purchasing power of money due to inflation).
Phew, that’s a lot of finance talk! Are you still with me?
As an employer or business leader, it’s important that you are aware of all of these factors because they influence the salary increases you give to employees.
With anticipated labour shortages and a high demand for employees in sectors such as engineering, specialist information technology, and skilled trades it’s especially important to reward employees fairly as it can be a large factor in attracting and retain top talent.
Labour market pressure is most acute in Saskatchewan and Alberta, where over 80%1 of employers face recruiting/retaining challenges. The pressure is greatest in the natural resources sector, where virtually all firms responding to the survey are facing these challenges.
According to the HR Reporter, “Given talent shortages in resource industries, it’s not surprising that employers in Alberta and Saskatchewan are again expecting to offer the highest base pay raises, (salary increases in 2012 averaged 3.9% in both Alberta and Saskatchewan). Alberta employers are projecting average salary increases in 2013 of 3.8%, slightly higher than the 3.7% average in Saskatchewan.”
The oil and gas industry is projecting the highest average increase at 4.2% in 2013, followed by the natural resources sector (excluding oil and gas) at 3.6%.
Outside AB and SK, the average salary increase in 2013 for non-unionized employees is projected to be 3%, although this varies according to province and industry.
In the private sector, the expected salary increase in 2013 is 3.1% (0.8 percentage points above the 2.2% inflation rate forecast for the year ahead and slightly above the 3% increase given last year).
In the public sector the salary increase in 2013 is expected to be 2.8%. The public sector includes federal and provincial government departments, agencies, and Crown corporations; municipalities; hospitals; universities; and colleges.
The lowest average salary increase is expected in Ontario at 2.7%.
For unionized employees, the average salary increase projected for 2013 is 2%, slightly below the actual increase for contracts negotiated in 2012.
Full Consumer Price Index statistics for all provinces are available at Stats Canada.