Canada’s near-term employment picture looks set to provide reason for both hope and fear for workers as organizations plan for hiring sprees and brace for staff reductions, a new survey reveals.
Towers Watson’s survey of 459 employers globally—including 73 in Canada—found that while 87% of Canadian employers plan to hire for new positions in 2010, 39% are also planning targeted workforce reductions, down only slightly from the 44% that have done so since the financial crisis began. Canadian organizations are acting somewhat more conservatively than their U.S. counterparts, where 92% of employers are planning to hire and only 36% are planning targeted workforce reductions.
Productivity slipping
The survey also found that despite lower productivity than those in other parts of the world, Canadian organizations are optimistic that employee engagement levels will remain largely the same or increase. Fifteen percent of Canadian respondents reported lower productivity compared with pre-financial crisis levels—higher than any other region globally. And while 27% believe employee engagement has increased since before the financial crisis, 23% report lower engagement today. For 2010, 36% expect engagement to rise while only 8% feel it will decline.
In terms of retention, 27% of Canadian respondents agree that it’s easier to retain talent now than it was before the financial crisis. However, 41% expect it to be more difficult a year from now.
“Without question, the last 18 months have been challenging for employers and employees, and while there are signs of improvement, it’s clear [that] we’re not going back to ‘business as usual’ any time soon,” says Kevin Aselstine, managing director for Towers Watson in Canada. “As always, the question is how lean can companies run, especially as demand for products and services rises? Those slower to reinvest in their workforce could find themselves at a competitive disadvantage.”
Aselstine adds that while employee engagement has been maintained or improved by some organizations, employees may be in danger of burning out under the weight of heightened workloads. “That’s when retention risk becomes very real—and a potential threat to growth.”
Costs
Total labour costs have increased compared with pre-crisis levels, despite recent cutbacks. Roughly one-quarter of Canadian respondents reported higher total labour costs, and 40% expect even higher costs a year from now.
Canadian employers expect the median salary increase in 2010 to be 2.5%, compared with 3% in the U.S. and 2% in Europe. Twenty percent of Canadian employers said their employees’ share of the cost of healthcare coverage is higher now than it was before the financial crisis, and no significant changes are expected going into 2010. Only 5% of Canadian respondents reduced company contributions to retirement savings plans, but 10% reported that employees have decreased their contributions. Almost one-quarter (23%) said employees had shifted retirement savings plan allocations out of equities, and 12% expect employees to shift back toward equities a year from now.
“While Canadian employers are clearly hopeful that 2010 will bring healthier balance sheets and bottom lines for their businesses, they also seem mindful [that] their employees might not share that optimism,” says Aselstine. “With unemployment numbers still high, many employees will not be able to shake off their concern for the future. How a strengthening global economy will affect these trends remains to be seen. The good news, based on our client experience, is that many companies already recognize the need to make thoughtful investments to retain and engage their existing talent despite the continuing uncertainty about the business climate and the resulting caution about taking on added workforce costs.”
To comment on this story, contact us.
(01/29/10)