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It shouldn’t be surprising that the latest salary forecasts for 2009 are showing more sombre numbers than the original predictions. But although some companies have dropped their planned increases significantly, the majority of companies are sticking to their initial plans. And, overall, the average paycheque should see a 2.8% increase over 2008 according to Hewitt Associates research.
Nearly 3% may sound healthy, especially since core inflation is projected to average between 1.6% and 1.7% in 2009. But it’s quite a bit less than the average annual increase of 3.6% in 2006–2008. The good news is that 71% of companies aren’t planning to revise their salary plans for 2009, according to research released in early November and compiled by the Conseil du patronat du Québec, a Montreal-based organization that combined information from six consultancy firms.
Hopefully, the lower raises are a fiscally responsible way for companies to help stave off huge layoffs or significant restructurings, but some policy changes are inevitable. Research by workplace consultant Watson Wyatt Canada shows that almost half of companies have or will institute hiring freezes, restrict travel policies and reduce their workforce over the next 12 months.
Liz Wright, office practice leader with Watson Wyatt Canada in Toronto, says one of the most important changes in the corporate world will be improving communications with employees about their pay and benefits. Wright says most companies are waiting to see what effect the economy will have on their business, and “they are not knee-jerking and reducing costs for the sake of reducing costs.”
Alberta is still expected to lead Canada, even though salary projections have been slashed to 4% from 5.1%, reports Hewitt. But others won’t be as lucky. British Columbia businesses were initially projected to increase salaries by an average of 3.6% in 2009 but have since lowered that to 2.3%. In Quebec, the average pay raise will fall to 2.2% from the 3.5% previously expected. And in Canada’s biggest economy, Ontario, increases will be about 2.7% (instead of 3.5%), slightly below the national average, which is pretty good considering the province was in a rut even before the current financial crisis.
On the industry front, about 60% of companies in the financial, professional and manufacturing sectors are planning to revise their salary increases for 2009, while just 30% in other sectors such as retail, wholesale and pharmaceutical anticipate making any such changes.
Things may seem grim if you were planning on a big raise to staunch any market losses, but the fact that the majority of employers are sticking to their original budgets has to be a relief for many. Perhaps it’s time to just be thankful that you have a job—if you still do.
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