2019 Salary Increases – Aligning Projection with Practice
The 2019 Salary Increase Projections are in!
What and how will you pay your employees in the coming year?
Based on three large annual compensation surveys – each of which gathered data from 360+ employers across Canada (Aon’s Canada Salary Planning Report; Morneau Shepell’s Trends in Human Resources Survey; Conference Board of Canada’s Compensation Planning Survey) – the average projected increase to Canadian salaries in 2019 is 2.7%. This number is consistent with the Bank of Canada’s projected rate of inflation (2.5%) in the first half of 2019.
While each survey differs on specific industries, overall, those projecting higher than average increases (3 – 3.8%) include: Professional, Scientific & Technical Services; Educational Services; Mining, Construction & Engineering; Medical Devices; Media; Financial (Non-Banking); Real Estate, Rental & Leasing; Food & Beverage; and Tobacco.
Those projecting lower than average increases (1.5 – 2.1%) include: Arts, Entertainment & Recreation; Health Care; Social Assistance; and Information & Cultural Industries.
Again, with slight differences amongst surveys, Saskatchewan was noted as having the highest average projection (2.9%), followed by BC (2.8%) and Alberta (2.7%), while Manitoba noted the lowest at 2.3%.
While this research provides a reasonable and effective baseline for what other organizations and industries are doing, it’s important to base salary increase decisions not only on the market, but on your overall compensation philosophy. In other words: clarify the guiding principles that drive compensation decisions and that spell out why you make the decisions that you do.
More specifically, before moving forward with a raise percentage that works for other organizations, clarify what works for yours:
- What’s driving the need for an increase? Is it your competition, the industry, your stage of growth, your values, the need for retention or reward?
- What’s happening in the market? i.e. the competition, political environment, economy, clients
- Where do you want to target in the market? At, above, or below the median? Are your salaries currently below where you want to target? Are they internally equitable?
- Under what circumstances do you wish to provide increases? i.e. COLA, tenure, performance, promotions, and/or annual “just because”
- Where does your overall Total Compensation stand? i.e. benefits, vacation, incentives, perks, RRSP, etc.
- Can your organization afford it?
While it may seem like a lot to address, a solid compensation philosophy will support your decisions about increases going forward and provide you with a consistent and transparent platform to communicate to your employees.