OTTAWA — A report done by business research group Watson Wyatt Data Services shows that more Canadian employers plan to hand out raises next year than was the case this year or last.

The report said 92.2% of Canadian employers have budgeted to increase base salaries next year. That’s up from 79.5% of companies that had planned to give raises this year and 91.4% who provided salary boosts in 2008. “Companies tend to feel . . . ‘If we held back salaries in 2009 and we laid off or we’ve done some restructuring . . . to reward our key players and to keep people on board and to keep them engaged, we have to budget something,'” said Cherie Langevin, director of survey operations for Watson Wyatt Data Services.

The average pay bump for the companies planning to boost pay is expected to be 3% in 2010 — unchanged from this year. That’s down from the average 3.7% raise in 2008, the report said. Liz Wright, Watson Wyatt’s Toronto-based consulting head for compensation issues, said it’s indicative of the apprehension employers still have over economic conditions that the raises planned for next year fall short of 2008. “There’s certainly a lot of optimism, but we’re just not out of (the economic difficulties) yet,” she said. “Just because we had one month (June) showing positive GDP, it doesn’t mean we’ve totally turned the corner yet.”

The Watson Wyatt report shows working in the not-for-profit sector can be personally profitable, with the average salary hike there expected to be 3.8% compared to 2.9% in the for-profit sector. Ms. Wright said, as with most employers, the not-for-profit sector faces tight competition in attracting top talent. They tend not to provide the same level of performance bonuses seen in the for-profit sector, she added, and often have to put a greater deal of focus on base-salary increases for recruitment and retention purposes.

Only limited regional Canadian data was made available by Watson Wyatt on Tuesday, with more information expected to come out later in the week. Of the information available, Saskatchewan had the highest average planned salary hike next year at 3.1%, and Vancouver was the leader as far as cities go, also at 3.1%. The only other province for which results were released, Nova Scotia, was expected to see an average pay hike of 2.8% in 2010. For other cities, Montreal, Toronto and Winnipeg were all on track for 2.9% salary increases, while Calgary was slated for an average pay hike of 3%.

The data is based on surveys of 106 Canadian organizations between April and June. No margin of error was provided.

Financial Post September 1, 2009

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