Merit budgets increased by 2.6% in 2019. A new report from Mercer estimates that wage increase budgets for merit will remain at 2.6% for the year 2020.
Their findings and statistics were compiled from 652 Canadian employers and reported in the 2019/2020 Canadian Compensation Planning Survey. To retain reasonable trending accuracy, the data does not include any companies currently undergoing salary freezes.
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Technology companies average 3.2% increases
The wage increase level previously hovered at 2.5% for the three years, 2016 to 2018. In 2019, the merits budget averaged a 2.6% increase. In part, this is due to growth in various markets, especially technology companies who averaged an impressive 3.2% wage increase rate. This is due to increased competition for talent in those relatively warmer sectors.
The survey also found that there were two stand-out factors behind these increased wage raise rates:
- Seventy-two percent of companies surveyed claimed that retention was the main reason for rising wages.
- Seventy percent intend to raise salaries due to concerns about attracting new talent into the company.
High performers increased 1.85 times more than average
The report revealed that high-performing employees at these 652 companies received increases in salary 1.85 times larger than average performers.
The majority of companies are currently investing and committing to increasing their employees’ salaries — only six percent decided to freeze executive wages this year. This figure drops to 4.8% for non-executives.
Out of the 652 companies surveyed, 57% intend to keep their current wage increase rates at the same level for 2020.
Gordon Frost, at Mercer, said: “Getting compensation right is critical to your employee value proposition. When you have the right compensation strategy in place, you can bolster employee retention and build a thriving workforce.”
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