Canadian Organizations Expect 3.1% Salary Increases in 2012

The projected 2012 increase is a slight improvement over actual 2011 salary increases, which averaged 2.9%. “The Consumer Price Index (CPI) is expected to average 2.9% this year, so many employees’ raises are just keeping up with inflation,” said Suzanne Thomson, a Senior Associate with Aon Hewitt in Toronto, in a news release. “Next year, Statistics Canada is projecting a 2% increase in the CPI, so employees should feel less of a pinch if salaries increase by 3.1%.”

Another positive trend is limited pay freezes. This year, 2.7% of employers froze salaries; less than half a percent is expect to do so next year. In 2010, that number was 8.5%, while it was 29.2% in 2009. “There is more good news with respect to pay cuts,” said Thomson. “Of the very few organizations that reported cutting salaries in 2011, two-thirds are planning to fully or partially restore that cut.” 

“The news regarding salary increases, while positive, does present some challenges for employers,” stated Susan Hunter, National Leader of Aon Hewitt’s Rewards group, in the announcement. “Employee attraction and retention will become more pressing issues as the supply of workers decreases with baby boomer retirements. If base salary increases are modest, employers have to find ways to hang on to their high performers.” 

In June and July 2011, 542 employers, representing over 800,000 salaried employees, responded to this annual survey.