Nearly half of employers modify salary increase plans for 2021
Nearly half (43%) of employers in Canada have modified their salary increase plans for 2021 due to Covid-19, according to Gallagher’s 2020/2021 Salary Planning Survey. The insurance broker and HR consulting firm polled business leaders and HR practitioners across 226 organizations.
Of the nearly half of employers who changed salary increase plans for 2021, 45% expect to reduce raises, 35% plan to freeze salaries, and 6% plan to reduce salaries.
The Covid-19 pandemic has caused many organizations to reduce their workforces, institute hiring freezes, and decrease salary increase budgets. Thirty-eight percent of employers already altered their salary increase plans in 2020, according to the Gallagher survey.
"Market reactions to the pandemic and the economic downturn are applying downward pressure to Canadian salaries and employers tell us that these compensation-containment measures will extend into next year," said Melanie Jeannotte, CEO of Gallagher's benefits & HR consulting division in Canada.
"The impact Covid-19 will have on costs and revenue will be unpredictable in the year ahead, which is causing many employers to reconsider salary increases in an effort to preserve jobs in 2021."
The pandemic downturn is also making employers shift their employee-benefit priorities to cost reduction. Gallagher’s 2020 Benefits Strategy & Benchmarking Survey found that 55% of Canadian employers identified “controlling costs” as the top benefits-related challenge this year.
Nonetheless, 68% of employers indicated they have increased their focus on the emotional wellbeing of employees – many of whom have been affected by lifestyle changes, financial difficulties, and other anxieties stemming from the pandemic. Over half (56%) increased employee wellbeing initiatives, with 37% offering new tools and resources and 19% expanding programs.
"Employers who can strike the right balance between cutting costs and investing in their employees' financial, physical, and mental health will be better positioned to retain staff and compete for new talent when the labour market picks up," Jeannotte added.
