The shortage of labour in Alberta has caused salary increases in Calgary to far exceed those in the rest of the country, according to Hewitt Associates.
Its 29th annual Canada Salary Increase Survey reveals that employees experienced an average increase of 5.3% in 2007, only slightly higher than the 5.2% increase employers projected a year ago and on par with the 5.3% actual increase in 2006. Employers are forecasting an average of 5.2% for Calgary workers.
“Calgary employers have focused this year on meeting their current labour demands,” says Dan Stewart, a senior consultant in Hewitt’s Calgary office. “Employers in Calgary are becoming more strategic both in what they offer and how they explain compensation, so they are well-positioned to win not just the battle but the war for talent.”
Salary increases are expected to be slightly lower in the rest of Canada. The average base salary increases are projected to be 3.8% across the country. Base salary rose by the same percentage this year and by 3.6% in 2006. This is comparable to actual and projected salary increases for U.S. workers.
Hewitt found that virtually no Canadian companies reported freezing salaries in 2007 and none expect to do so in 2008. Increases for 2007 were 3.7% in Vancouver, 3.4% in Montreal and 3.3% in the Greater Toronto Area(GTA). Employers project a 2008 increase of 3.7% in Vancouver, with increases of 3.5% and 3.4% expected for Montreal and the GTA, respectively.
Alternatives to dramatic increases in base salary include initiatives geared toward awarding higher pay for high performance as well as ensuring that employees appreciate the value of all the benefits they receive as part of their compensation package.
Some organizations are taking the total compensation approach. Rather than providing salary information only, organizations may also want to consider spelling out the value of benefits. “If employees understand how much all aspects of their compensation package cost, they’ll be able to make apples-to-apples comparisons with what a competitor is offering,” explains Keri Humber, a Toronto-based senior consultant with Hewitt. “They may not be lured away by a higher salary if they appreciate the value of the orthodontia coverage and pension plan provided by their current employer.”
Employers are also replacing special compensation arrangements for “hot skill” jobs with flexible work arrangements. They are currently offered by 81% of organizations, up from 75% in 2004, and include flexible work hours, working from home all or part of the time, and compressed work weeks. The challenge is what to offer next when so many employers are already offering flexibility.
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In 2007, average actual salary increases across all industries ranged from 3.2% for union employees to 4.1% for executives. Salary increases projected for 2008 run from 3.1% for union employees to 4% for executives.
Increases are highest in the oil and gas industry where they averaged 6.3% for all positions in 2007, and are expected to be around 5.5% next year. Other industries where salary increases are projected to exceed the national average in 2008 include government(5.2%), construction/engineering(4.7%)and aerospace(4%).
Industries with lower expectations for salary increases in 2008 include automotive(3.4%), hospitality/restaurants(3.2%), printing(3%), and forest and paper products/packaging(2.8%).
For a copy of the survey on Hewitt’s website, click here.