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Salary increase projections for 2012, ‘cautiously optimistic’

salary-increaseI’ve been doing some reading to see what salary increases are predicted for the year 2012, and whether things will be more optimistic for Canadian employees who work hard to make ends meet. It turns out that most are projecting a marginal increase from last year, when employees also received marginal increases; that is, lower than the increases prior to the economic downturn.

Hay Group’s salary increase projection anticipates that Canadian employers will offer a national average salary increase of 2.8 percent for 2012, which is higher than the 2011 average actual salary change of 2.7 percent. However, these numbers are much lower than the 2009 projection of 3.7 percent before the economic downturn.

It appears that the overall feeling is positive. Some provinces will likely have workers receiving larger raises. For instance, while employees in Ontario will likely see a salary increase of 2.7 or 2.8 percent, workers in provinces like Alberta and Newfoundland will see salary increases of 3.4 percent.

The study also points out that some industries will fare better than others. For example, healthcare will likely only see salary increases of 1.3 percent, while the government and retail sectors will likely see salary increases of 2.3 percent, and those in the private sector will see salary increases of about 2.8 or 2.9 percent.

Another salary projection is even more optimistic. In Ontario, WorldatWork expects both the GTA and Toronto to experience annual raises at 3.0 percent. In this report, Saskatchewan is the leader at a projected salary increase of 4.4 percent.

The study goes on to point out that, with the upcoming labour shortages due to baby boomer retirements, this projection places pressure on employers to provide decent salary increases to retain high performers. In addition to providing raises, the report suggests methods of engaging employees by participating in other conversations involving training and development opportunities, career advancement options and workplace flexibility.

The report recommends that, “If additional financial compensation is not possible, it’s especially important to make sure high performers are continually challenged and recognized for their achievements. That will help to keep these key employees on board.”

In an even more optimistic report, Culpepper projects Canada salary increases will rise from 2.76 percent in 2011 to 2.94 in 2012, with most companies budgeting for 3.0 percent in 2012. What’s more, companies in Canada are expected to budget 5.0 percent for high performers, 3.0 percent for average-performing employees, and no increases for low-performing employees for the year 2012.

But overall, my findings seem to suggest that average salary increases are going to be about 3.1 percent in 2012. Ontario is at about 3.0 percent. This makes sense since the consumer price index (cost of living increase) is at about 2.9 percent this year.

It was noted that only two percent of employers projected salary freezes for 2011. For 2012, the projection of salary freezes is at 1.5 percent. So that is a good sign.

What so you think? Is this realistic in your view? Do you think it should be higher or lower?

Christina Catenacci
First Reference Human Resources and Compliance Editor

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Christina Catenacci

Christina Catenacci, B.A., LL. B., LL.M.,has been the content editor to The Human Resources Advisor Ontario, Western and Atlantic editions (print and electronic) published by First Reference Inc. since February 2005. Christina obtained her Professional LLM specializing in Labour Relations and Employment Law from Osgoode Hall Law School of York University in 2013. Read more
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