Canadian Manufacturing

Average salary should increase 2.4 per cent in 2016, says survey

The forecast continues a downward trend in Canadian salary increases that has developed since 2008

TORONTO—Canadians can expect to see average base salary increases of 2.4 per cent in 2016, according to a national survey of more than 525 Canadian public and private sector employers.

The survey was conducted by Hay Group in June and July. Participants include many of Canada’s leading employers.

The projection is lower than the 2.6 per cent projection for 2015, continuing a downward trend in Canadian salary increases that has developed since the start of the economic downturn in 2008. Canadians have now fallen further behind their U.S. counterparts.

According to the survey, 70 per cent of Canadian employers are forecasting that they will provide their employees with base salary increases in 2016, which is significantly less than the 83 per cent of employers who projected increases for 2015. This is due to continued economic uncertainty across many sectors in the Canadian economy and to the fact that more employers are now adopting a “wait-and-see” position before increasing their budgets.

Resource provinces behind the rest of Canada

Due to the high demand for skilled labour, workers in the oil and gas sector have traditionally received the highest salary increases in Canada, however, with the economic impact of collapsing oil prices over the last year, these workers are now projected to receive the lowest increases in the country at 1.5 per cent as employers shed jobs and the labour supply now exceeds demand.

Credit unions (three per cent), Leisure/hospitality (three per cent) and insurance (2.9 per cent) will lead all sectors with forecasts higher than the national average of 2.4 per cent.

Saskatchewan (2.7 per cent) and Alberta (2.5 per cent) still lead the country with projected overall base salary increases higher than the national average (2.4 per cent). However they are significantly lower than in recent years, due mainly to the global softening in commodity prices, particularly in the Alberta oil and gas sector. Unless there is an unforeseen jump in demand from the major oil and gas importing economies e.g. China, the EU or a choking off of supply by OPEC, principally through Saudi Arabia, then this year’s results will turn from a blip into the new norm for Alberta.

Looking at the 2016 projections for major Canadian cities, workers in Edmonton are projected to receive increases of 2.9 per cent, followed by Regina at (2.6 per cent) and the GTA, Saskatoon, Winnipeg and Ottawa at 2.5 per cent.

Other findings

  • For all organizations, actual base salary changes realized in 2015 was 2.2%, lower than the 2.6% projected in the survey as the economic performance across Canada has not lived up to predictions
  • By job level, most positions will be at or above the national average of 2.4%. Only unionized clerical/operations positions will see average increases (2.2%) below the national average.
  • Saskatchewan (2.7%) shows the highest 2016 base salary projections, followed by Alberta, Manitoba, Ontario and Quebec at 2.5%
  • Alberta’s projection (2.5%) is down from last year’s projection of 3.1%, showing the impact of the economic decline from the collapsing oil prices
  • Manitoba’s projection (2.5%) is an increase from the 2.3% projected for 2015
  • BC’s projection (2.3%) falls below the national average of 2.4%.
  • No change to the Ontario and the GTA projections of 2.5%
  • Quebec’s projection (2.5%) declined from 2.6% for 2015 and Maritimes (1.9%) declined from 2.1%.
  • Projections for countries such as U.S. (3.0%) U.K. and Australia (2.5%), and Canada (2.4%) continue to lag behind those for India (10.8%), Brazil (7.0%) and China (preliminary results show 7.6%).

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