December 7, 2009 / 8:51 PM / in 8 years

Canadian compensation seen improving in 2010

TORONTO (Reuters) -Canadian employers are expected to increase compensation in 2010 after a year of salary freezes, though pay raises will remain far below levels seen before the recession, a survey released on Monday showed.

The survey of 143 Canadian companies, conducted by Towers Perrin, found only 11 percent expect to freeze salaries for 2010, down from nearly half in 2009. That number increases to 18 percent when it comes to senior executive salaries.

But the budget for pay raises is modest: The median salary increase for employees is expected to be 2.5 percent, down from 3.5 percent before the recession.

Canada is not alone, the human resources consultancy said. The projected median salary increase around the world averages about 3 percent or less, according to Towers Perrin’s global compensation planning survey, conducted in the summer of 2009.

Only fast-growing and high-inflation countries like Brazil, Russia, India and China are projecting faster salary growth of 7 percent or higher.

The Canadian results reflect continued uncertainty about the economic recovery, Towers Perrin said.

About a third of those surveyed believe the recovery will happen in the next eight months, another third not until late 2010, and a final third not until 2011 or later.

“In the current environment, it’s not surprising that companies are exercising caution about returning to pre-crash levels of compensation,” Fiona Macdonald, managing principal with Towers Perrin, said in a statement.

“In fact, this period may signal a new approach to compensation altogether, with companies rethinking their total compensation policies and budgets and implementing better pay-for-performance linkages across the organization, not just in the executive suite.”

Reporting by Andrea Hopkins; Editing by Frank McGurty

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