Employers are tightening their payroll budgets the most they have in two decades and will offer modest salary increases next year. At the same time, they say they are worried about how their workers will manage in retirement.
According to Morneau Shepell's annual Trends in Human Resources survey, Canadian employers are planning to increase salaries by an average of 2.1% in 2017, down from the 2.5% increase reported in last year's poll. This amount includes expected salary freezes but excludes promotional or special salary adjustments.
“Lowest salary increases in more than two decades”
“With low oil prices and slow economic growth, employers continue to be cautious,” says Michel Dubé, a principal in Morneau Shepell’s compensation consulting practice. “Our survey showed that actual salary increases in this year averaged just 2.1 per cent, and employers are expecting to stay at this level for 2017 as well. These are the lowest expected salary increases that we’ve seen in more than two decades.”
The survey also found that employers are worried their employees may not be prepared to face retirement; about one in four are considering whether they should provide decumulation options for retirees.
“Employees are often left to fend for themselves”
“As employers move away from defined benefit pension plans, and stop providing health benefits after retirement, employees are often left to fend for themselves when they retire," comments Randal Phillips, executive vice president and chief client officer of Morneau Shepell. "They struggle to choose among relatively expensive investment and health insurance options, and often make poor choices about how much of their savings they can safely withdraw to avoid running out of income later in life, or how much insurance they need for unexpected health costs."