Compensation in 2021: What can we expect?

The Conference Board of Canada’s Compensation Planning Outlook 2021 survey has found that organizations are planning modest salary increases for the year as a result of the global pandemic weighing-in heavy on company revenues. 

Employers are expected to exercise restraint for their salary budgets in 2021. The average pay increase for non-unionized employees is projected to be 2.1% for the year, at pace with the forecasted inflation rate. In recent years, pay increases in Canadian organizations have been among the lowest of the past 25 years, a trend that is set to continue in 2021.

With a tepid economic recovery ahead, Canadian employers are beginning to assess potential salary increases for next year. The Conference Board of Canada’s Compensation Planning Survey found that 40% of organizations do not yet have preliminary budget recommendations. Among these, 14% are planning a freeze on salary increases across all employee groups.

Additionally, short-term incentive payouts that were planned for 2020 fell short across all employee groups for a quarter of Canadian organizations surveyed. Unionized wages have also been hit hard by the global pandemic. Negotiated wages for 2020 came in at 1.7%, compared to 1.9% in 2019. Looking to 2021, negotiated wage increases are expected to fall further to 1.6%.

By sector, salary projections for 2021 are highest among Crown corporations at 2.5%, followed by public and private sector organizations, both projecting increases of 2.2%. At 1.7%, salary projections in Alberta are the lowest among Canadian provinces and territories.