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More than one-third of Canadian organizations froze salaries in 2020

By The IJ Staff | September 29 2020 02:03PM

Employees are less likely to get a raise this year due to the impacts of the COVID-19 pandemic. Thirty-six per cent of Canadian organizations froze salaries in 2020, compared to a pre-COVID forecast of just two per cent, found Morneau Shepell's 38th annual Salary Projection Survey, released Sept. 29.

The survey also revealed that this trend is likely to continue next year, with 46 per cent of employers uncertain about whether to increase or freeze salaries and 13 per cent already committed to freezing in 2021.

In 2019 the average salary increase was 2.4 per cent year-over-year – a significantly higher number when compared to the actual base salary increase of 1.6 per cent in 2020, says Morneau Shepell.

For 2021, employers in Canada anticipate a slight recovery, with base salaries expected to increase by an average of 1.9 per cent, including salary freezes. With salary freezes and promotional adjustments excluded, employers are projecting salaries to increase by 2.5 per cent in 2021 – down from the actual 2.6 per cent in 2020, excluding freezes.

"Uncertainty has been the buzzword of 2020, however, it's extremely important to look beyond the term itself to understand the critical implications that employers' instability has on our economy and Canadian employees and how to seek to mitigate that where possible," said Anand Parsan, vice president, compensation consulting practice. "This year's results are some of the most concerning that we've seen since the survey's inception in 1982. With nearly half of employers reporting uncertainty going into 2021, it's important that Canadians recognize the impact on their financial wellbeing as we expect another challenging year. Employers should revisit their total rewards strategy and consider what they can do to support their employees in such times, including access to financial education, access to resources and emotional support, as financial stress has a huge impact on overall wellbeing, resiliency and productivity of the workforce."

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