2009 pay increases vary greatly by industry, Mercer survey finds

Due to a tightening economy and labour market, employers plan to award average base pay increases of 3.8 per cent in 2009, slightly less than the 4.0 per cent increase granted in 2008, according to the 2009 Canadian Compensation Planning Survey from Mercer. Pay raises are significantly higher, however, for employees in regions with high-performing industries.
The current edition of Mercer's survey, which has been conducted annually for more than two decades, includes responses from more than 485 employers in Canada and reflects pay practices for more than 850,000 non-unionized or a total of almost 1.7 million workers.
Variation by industry
Increases to base salaries differ considerably by industry reflecting their performance. Compared to the expected average national pay increase of 3.8 per cent in 2009, Canadian employers in high-performing industries plan to grant salary increases that are about 40 per cent higher. Oil and gas and natural resources are the highest, with projected pay increases of 5.4 and 4.2 per cent respectively for 2009.  In contrast, durable manufacturing and transportation are expected to award less-than-average pay raises in 2009 at 3.4 per cent.  
"Clearly the uneven economy is having an impact on human capital and compensation strategies," says Iain Morris, principal at Mercer. "Alberta's economy, led primarily by the energy and natural resources sectors, continues to boom and employers are granting higher pay increases to reflect this growth. Organizations in other areas, such as Ontario where the manufacturing sector is struggling, are facing the challenges of a tightening economy."
Attracting and retaining employees
Regardless of whether organizations are experiencing talent shortages or job losses, they recognize employees are their best competitive advantage as they strive to grow their businesses. According to Mercer's survey, organizations are utilizing cash-based approaches, such as signing bonuses, spot cash awards and retention bonuses to hire and retain key talent.
"Although these cash-based strategies are quite effective in solving immediate needs, a more holistic approach to total rewards - one that considers base pay, variable pay, benefits and career development - is critical for maintaining a competitive advantage in the marketplace," says Morris.

Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer's investment services include investment consulting and multi-manager investment management. Mercer's 18,000 employees are based in more than 40 countries. For more information, visit www.mercer.ca .

For more information or to purchase the full report of Mercer's 2009 Canadian Compensation Planning Survey, visit www.imercer.com/cps or call 800-631-9628.