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Canada
Toronto, 19 August 2009

Canadian employers report they plan to award average base pay increases of 2.7 per cent in 2010, a rebound from the actual increases of 2.0 per cent awarded in 2009, according to the 2010 Canadian Compensation Planning Survey from Mercer. A key driver in the rebounding figures is the “salary thaw”. Approximately one-third of companies froze salaries in 2009, but only 8 per cent report they expect to implement a freeze in 2010 - a number closer to typical market response.

The current edition of the Mercer survey, which has been conducted annually for more than two decades, includes responses from more than 500 employers in Canada and reflects pay practices for more than 870,000 non-unionized employees.

“There are a number of signs that organizations are in recovery mode. Of the companies that plan to award increases, the all-employee average is 3.0 per cent for 2010, but it’s important to note that about 30 per cent of employers are undecided on next year’s salary budgets,” said Iain Morris, leader of Mercer’s Human Capital business for Central Canada.  “Many are still taking a wait-and-see approach to planning for next year. This degree of indecision on salary increase plans at this time of year is unusual. All eyes will be on the business results in the balance of 2009.”

Employers still expect to pay for performance 

“Even with tight salary budgets, organizations say they plan to reward top performers with increases 1.8 times larger than middle performers,” said Morris.  “Employers need to identify and differentiate pay for the people that are creating value for the organization. As the economy rebounds and there are more job opportunities, the retention of top talent will be critical.” 

This pay-for-performance practice is mirrored in 2009 actual short-term incentive payouts with top performers receiving awards approximately 1.5 times larger than middle performers.  Some organizations are taking this opportunity to re-visit compensation programs to ensure they align with business objectives, drive and reward desired performance. Up to 27 per cent of companies are making changes to short or long-term incentive programs. Overall, short-term incentive awards in 2009 for executives were lower than they were in 2008 reflecting poorer company performance in 2008 than in 2007.

Top employers recognize employees are their best competitive advantage and integral to recovery plans. According to Mercer’s survey, in addition to assessing cash plans, companies are looking to other aspects of the employment offer, in particular career planning and development programs, to engage employees and retain top talent. 

About Mercer

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. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges.

For more information, visit www.mercer.ca.

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