Salaries expected to go up, but real wages of Canadian workers could edge down after inflation

TORONTO -

Wages are expected to go up in Canada next year, but workers are unlikely to get a real pay raise as inflation risks eroding salary gains, according to a new survey and data released Wednesday.

A LifeWorks survey on the salary plans of Canadian employers showed a projected average annual pay increase of 2.5 per cent for 2022.

When excluding organizations that are planning salary freezes, the poll found average salaries are expected to rise 2.7 per cent next year.

The survey demonstrates growing confidence in the country's economic outlook compared with last year's projection, when employers forecasted an increase of 1.9 per cent including freezes.

Still, the salary estimates fall below Canada's rising inflation rate, which could leave workers with less spending power despite wage hikes.

Statistics Canada said the consumer price index in August rose 4.1 per cent compared with a year ago -- the largest year-over-year inflation increase since March 2003.

Yet a survey by payroll and HR management firm ADP Canada found work-life balance outweighs salary as top perk for Canadian workers.

The poll, conducted with Maru Public Opinion, found nine out of 10 remote workers polled hope to continue working remotely some or all days of the week, citing work-life balance as the most important factor.

When asked to compare their current priorities to those before the pandemic, the poll found 31 per cent of working respondents said a job that respects work-life balance is more important to them now, compared to only 20 per cent who felt salary had become more important.

Meanwhile, the LifeWorks survey found the highest wage increases are expected in the wholesale trade industry, where average salaries excluding freezes are expected to climb 3.1 per cent. The construction, accommodation and food services, and information technology sectors are projected to see wage increases of three per cent.

Anand Parsan, partner and national practice leader of compensation consulting for LifeWorks, said labour competition is forcing employers to adjust wages.

"Canadian employers are walking a tight line as they juggle and balance a number of factors when it comes to making decisions about their 2022 salary and workforce planning," he said in a statement. "A tight labour market has caused 'the great resignation,' which is forcing organizations to adjust pay levels by the highest percentage in the last five years."

This report by The Canadian Press was first published Sept. 15, 2021.