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Morneau Shepell survey shows employers expecting slowed growth in salaries for 2016

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Investment / Canada

Morneau Shepell survey shows employers expecting slowed growth in salaries for 2016

Annual survey of Trends in Human Resources indicates employers are cautious about the coming year

TORONTO, Aug. 6, 2015 /CNW/ - Employers in Canada are expecting salaries to rise by an average of 2.5 per cent in 2016, according to Morneau Shepell's annual survey of Trends in Human Resources. This is down from the average 2.8 per cent salary increase expected for 2015, as reported in last year's survey. The average includes expected salary freezes.

"With the crash in oil prices and talk of a recession in the air, employers are cautious about the coming year," said Michel Dubé, a Principal in Morneau Shepell's Compensation Consulting Practice. "Some sectors such as mining, oil and gas are expecting average salary increases of about 2.4 per cent for next year. Last year, the comparable forecast stood at 3.4 per cent. As governments focus on balancing their budgets, we're seeing signs of lower salary increases in the public sector as well. Salary increases in education are expected to be in the 1.9 per cent range, and only slightly higher at 2.1 per cent in other areas such as public administration, health care and social assistance.

"The highest salary increases will be in financial services at 3.0 per cent, and professional, scientific and technical services at 2.9 per cent," said Dubé.

Reflecting the mix of industries in the provinces, Alberta is expected to have the lowest salary increases next year, at 2.2 per cent. This is down from the 3.4 per cent estimated in last year's survey. By contrast, other parts of Western Canada are expecting higher-than-average increases in the 2.7 per cent range. Other provinces will be close to the national norm at around 2.5 per cent.

Employee health and productivity a priority for 2016

In addition to looking at expected salary increases, the survey also asked Human Resources leaders about their priorities for 2016.

"Faced with uncertain economic times, organizations will be investing in more programs designed to improve productivity," said Randal Phillips, Executive Vice President and Chief Client Officer at Morneau Shepell. Sixty-six per cent of survey respondents said that improving the health and engagement of their employees is a top priority for 2016. This is up from 53 per cent last year.

Phillips notes, "Given the pace of change today, there is a strong link between the health and coping skills of employees and their engagement at work." More than 30 per cent of employers in the survey plan to have health risk appraisals in place for their employees by the end of 2016, and more than a third of employers are planning to introduce coping skills training in 2016.

Phillips added, "We're also seeing a big shift in the way employers view their benefits and wellness programs. In the past they would introduce their programs without evaluating whether or not they were delivering results, but this is changing. More than 20 per cent of employers said they are monitoring the overall health and engagement of their organization today, and our survey suggests this will almost double by the end of 2016."

Mental health continues to be a strong area of focus. This is the leading cause of sick leave and disability and is a growing concern in many companies; the Conference Board of Canada estimates that mental illness costs employers more than $20 billion per year. Over half of employers in the survey expect to have mental health training for managers in place by the end of next year, and 28 per cent are developing plans to address psychological health and safety in their workplaces.  

In addition to improving health and productivity, organizations are also looking for ways to reduce costs. One of the top priorities among employers is reducing the cost of sick leave and disability, and helping people get back to work sooner. More than 40 per cent of employers in the survey said this is a key area of focus for the coming year.

Shift in employer attitudes to retirement plans

The survey also identified some important changes in employer attitudes to retirement plans. "In the past, sponsors of defined contribution pension plans left it up to their employees to fend for themselves when they retired," said Phillips. "Their retirees often struggled to choose amongst relatively expensive investment options, and figure out how much of their savings they could safely withdraw each year to avoid running out of income later in life.  Poor decisions can have a very significant impact on retirement income, and plan sponsors are starting to take notice."

About 27 per cent of sponsors in the survey said they are looking at providing payment options for retirees, or are already doing this. "This is a very positive step toward income security for retiring Canadians, and we hope more plan sponsors will take action in this area in the coming years," added Phillips.

Morneau Shepell's 33rd annual Trends in Human Resources survey was conducted between mid-June and the end of July 2015, with input from organizations employing 640,000 people in Canada. The benchmark organizations represent a broad cross-section of industry sectors.

About Morneau Shepell Inc.
Morneau Shepell is the only human resources consulting and technology company that takes an integrative approach to employee assistance, health, benefits and retirement needs. The Company is the leading provider of employee and family assistance programs, the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity and improve their competitive position. Established in 1966, Morneau Shepell serves approximately 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With almost 4,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit

SOURCE Morneau Shepell - Investment

For further information: Nathan Gibson, Manager, Corporate Communications, Morneau Shepell,, 416-390-2641