Morneau Sobeco

Morneau Sobeco

August 30, 2007 06:00 ET

Morneau Sobeco: More Than Ever, Salary Increases in 2008 Marked by Regional Differences

TORONTO, ONTARIO--(Marketwire - Aug. 30, 2007) - Your salary increase for 2008 will depend more than ever on your province of residence, according to Morneau Sobeco's annual survey on compensation trends and projections.

The average salary increase budget of Canadian employers for 2008 is 3.7%, including a provision for promotional increases.

After reaching a five-year high last year, salary increases are projected to stabilize across most of Canada. Nationally, the average salary increase expectations vary from 3.1% for operation and production staff to 3.4% for executives before promotional increases.

The highest salary increase expectations are reported in Alberta with average expected increases ranging from 4.3% for operation and production staff to 5.6% for executives before promotional increases.

The salary increases in Western Canada are being driven by a demand for staff. One-third of the survey participants in Western Canada are looking to significantly boost their staff levels in 2008. In contrast, fewer than 10 percent of participants in Central Canada are planning to significantly ramp up their staff levels.

Almost three quarter of respondents in Western Canada (and about half of those in Central Canada) reported that hot skills recruitment is one of their key HR issues. "People with specialized skills or in trades are in high demand," says Gord Simle, a Partner in Morneau Sobeco's Calgary office.

The highest salary increase expectations in Canada are reported by companies in mining and gas extraction, with average expected increases of 4.3% for all job categories excluding promotional increases. Companies that fabricate paper or wood products reported the lowest salary increases with average increases ranging from 1.7% for operation and production staff to 2.1% for executives.

The top benefit issues for employers in 2008 continue to be health care costs and disability management, even though the proportion of employers reporting health care costs as a key benefit issue has dropped to approximately 45% from almost 60% two years ago as health care cost increases have generally trended lower.

"The reason for the lower cost increases," says Keith Morrallee, a Partner in Morneau Sobeco's Toronto office, "is the result of less downloading of costs from public plans, as well as a reduction in the releases of new break-through drugs. But that may well be temporary since there are a significant number of new medications on the horizon."

Nearly 10 percent of participating employers with defined benefit (DB) pension plans indicated that their pension plans have been closed to new employees in the past two years and a similar proportion indicated that their plan will likely be closed to new employees next year.

"The continued shift is attributable to the increased volatility in pension investment returns and employer pension costs over the last several years," says Jean Bergeron, a Director in Morneau Sobeco's Montreal office. "Although investment returns were better in 2006, the recent market turmoil due to the credit crisis reminds us that investment risks and volatility exist and must be managed."

The aging workforce is a key HR issue for almost half of Canadian employers. As a result, approximately one-third of all respondents want to offer retirement planning education to their employees, up from a quarter last year.

Finally, over 30 percent are planning to provide total compensation statements to their employees next year.

The survey conducted across Canada between June and August covered 335 organizations serving over 900,000 employees. This is Morneau Sobeco's 25th Annual Compensation and Trends Projections Survey.

Contact Information

  • Morneau Sobeco
    Andre Sauve
    (514) 392-7835
    Morneau Sobeco
    Michel Dube
    Director Compensation Consulting
    (514) 392-7802