CA Compensation Planning Survey Pulse – April edition

April 28, 2020

Findings of Mercer’s Canadian Compensation Planning Survey – April edition. Questions and findings change with each survey edition so be sure to check out the full series of articles.

Earlier this month, Mercer conducted a 2020 Canadian Compensation Survey – Monthly Pulse. Given the current economy and evolving labour market, we decided to take the “pulse” of employers right now to find out how the COVID-19 crisis may or may not have impacted 2020 salary increase budgets and implementation.

Timing is everything

Just over half of organizations have already provided or are planning to provide their 2020 increases as budgeted. For the most part, the remainder have not yet finalized plans, are delaying their decision, or are undecided on when (or whether) they will provide increases in 2020. About one in 10 organizations have frozen salaries.

The majority of organizations (77%) completed their budgeting process for 2020 annual increases prior to the pandemic — with nearly half (46%) of these organizations reporting that they implemented increases before the impact of COVID pandemic. Had the real impact of the pandemic hit Canada even a few weeks later, the choices employers made regarding salary increases might have been different.

Almost one-quarter (23%) of organizations have not yet established budgets for 2020 annual increases. Of these companies, the majority are taking a “wait and see” approach.

Increases are lower than expected

Overall, actual merit and total increases being implemented are slightly lower than what was planned pre-COVID. At this point, average increases provided for merit and overall salary are both 2.3%. This compares to planned increase budgets of 2.5% and 2.6%, respectively.

Energy and Retail hardest hit

There is some differentiation by industry (or “sector”) — with Energy and Retail being the hardest hit. COVID-19 has exasperated an already tenuous situation for the Canadian Energy Sector, which had already been negatively impacted by low gas prices due to oversupply.

The retail sector is another of the hardest hit. While certain areas of retail — grocery or companies with a strong online presence — are looking to hire and/or providing hero pay premiums, many retailers have been forced to shut down brick and mortar stores in response to social distancing measures.

Return to work on the horizon

As organizations continue to respond to this crisis and eventually start focusing on the return to work, we expect to see compensation budgets fluctuate. Consider this April report a baseline and stay tuned to see how trends emerge.

To stay abreast of the trends and prepare for 2021 compensation planning, be sure to participate in May’s CA Compensation Planning Pulse Survey.

Note: All numbers are averages and include zeros.

CA Compensation Planning Survey Pulse – April Edition infographic image