Press Release

Canadian employees in line for flat pay raises in 2019, Willis Towers Watson survey finds

Star performers rewarded with significantly larger raises

October 11, 2018
| Canada

TORONTO, ON, October 11, 2018 — Canadian employees hoping for larger pay raises next year will have to wait a little longer. A new survey by Willis Towers Watson, a leading global advisory, broking and solutions company, reveals Canadian employers expect to maintain the status quo on pay raises at 2.8% in 2019.

The 2018 General Industry Salary Budget Survey, conducted by Willis Towers Watson Data Services, found Canadian employers project to give professional and client management employees average pay increases of 2.8% in 2019, same as last year. Production and manual labor employees can also expect flat increases next year — 2.7% in both years. Executives may receive a slightly lower increase next year (2.8% versus 2.9%), while steady increases are planned for management employees (2.8%) and business and technical support employees (2.8%). Only 3% of companies plan to freeze salaries next year. Pay raises have hovered around 3% for the past decade.

After a very strong 2017 and moderately strong 2018 from both a GDP and employment growth perspective, we expect growth to slow somewhat in late 2018 and through 2019 due to slower than expected consumer spending and our aging population. As a result, the continued tightening in the Canadian labour market will mean that organizations will struggle to retain employees with limited salary increase budgets. Organizations are looking for more efficient ways to use their limited budgets and are rethinking how and when they give increases.

The survey found companies continue to reward their star performers with significantly larger pay raises than average performing employees. Professional employees receiving the highest possible rating were granted an average increase of 4.7% this year, nearly double the 2.4% increase granted to those receiving an average rating.

“Most companies are not under pressure to significantly increase their salary budgets in the near term,” said Sandra McLellan, North America Rewards business leader at Willis Towers Watson. “Companies are relying more on variable pay such as annual incentives and discretionary bonuses to recognize and reward their best performers. At the same time, they are rewarding star performers with substantially larger increases while granting minimal increases, if any, to their weakest performers.”

Indeed, the survey found companies are projecting discretionary bonuses — generally paid for special projects or one-time achievements — will average 5.3% of salary for professional and client management employees, somewhat higher than companies budgeted for this year. Slightly larger discretionary bonuses are planned for most employee groups. Annual performance bonuses, which are generally tied to company and employee performance goals, are projected to hold steady in 2019 for all employee groups.

“A growing number of companies are coming to grips with the fact that employees are more willing to change companies to advance their careers and to talk openly about their pay. As a result, organizations are facing increased pressure entering next year to devise a focused strategy and plan on how to allocate their precious compensation dollars or risk losing some of their best talent,” said McLellan.

About the survey

The Willis Towers Watson Data Services General Industry Salary Budget Survey was conducted between April and July 2018, and includes responses from 366 Canadian companies representing a cross section of industries. The survey report provides data on actual salary budget increase percentages for the past and current years, along with projected increases for next year.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has more than 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.