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2012 Salary Budgets in Canada not affected by the U.S. and EU economic woes, so far

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Pension/Retirement / Canada

2012 Salary Budgets in Canada not affected by the U.S. and EU economic woes, so far

MONTREAL, Aug. 17, 2011 /CNW/ - Despite the prevailing uncertainty in the global economic outlook, Morneau Shepell compensation survey respondents are tabling for average salary increases of 2.8% for 2012 in Canada.

Surprisingly, survey respondents are optimistic regarding growth and profitability in their organizations for 2012, with 1 out of 4 respondents expecting significant growth in revenues and profitability. Only a minority of respondents anticipate significant shortfalls. The 2012 average salary budget increase is comparable to 2011, increasing from 2% to 3.5% overall. Morneau Shepell's 29th Annual Compensation and Trends Projections Survey was conducted between mid-June and mid-August and gathered input from over 250 organizations employing some 1.2 million people across all regions of Canada. 20% of survey respondents have operations in the U.S. It is worth noting this is the first time in a decade that the average salary budget increase is lower than the prevailing inflation.

The benchmark organizations are mostly from the manufacturing (27%), services (23%) and finance (16%) industries. The average salary budget increases in these industries are 2.6%, 2.7% and 3.2% respectively. The mining and oil and gas extraction sector respondents report among the highest budgeted increases (3.4% on average) and the lowest increases are shown by the public administration sector respondents (2% on average). As usual, regional differences in the survey results reflect the industrial structure of the regions.

Employers have been quite active in the last couple of years to introduce various measures that would rein in escalating costs of their benefits program. They plan to be equally keen again in 2012. Increasingly, employers are anticipating implementing preventive measures, such as health promotion initiatives, in order to better control future costs. Employers with defined benefit pension plans are planning to continue to implement various de-risking techniques in the face of heightened market volatility. The broader availability of de-risking products now allows smaller pension funds to implement effective risk management at an affordable cost. For sponsors of defined contribution pension plans, they anticipate continuing to streamline and simplify their funds offering and introduce new funds to address the requirement of providing a reasonable return without too much risk, in replacement for plain vanilla guaranteed investments such as GICs that are currently offering yields at historic lows.

Recruitment and retention are identified as the top HR priorities for 2012. While employers are recognizing the negative impact on productivity resulting from absenteeism and mental health problems, more than one third of survey respondents were unable to identify the main cause of short-term disabilities in their organization. Mental health issues were by far the number one cause preventing employees from being actively at work. In response to this issue, more and more organizations are hiring specialized expertise to deal with these complex cases and are proactively training supervisors so they can recognize mental health issues early and minimize the organizational and personal impact.

Morneau Shepell Inc. is the largest Canadian based human resources consulting and outsourcing firm focused on pension, benefit, employee assistance programs and other workplace health and productivity solutions. It offers solutions to assist employers in supporting the financial security, health and productivity of their employees. With approximately 2,300 employees in offices across North America, Morneau Shepell Inc. provides services to organizations across Canada, in the United States and around the globe. Established in 1962, Morneau Shepell has grown to serve over 8,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. Headquartered in Toronto, Ontario, it has offices in the United States and over 70 locations across Canada. Morneau Shepell Inc. is a publicly traded company on the Toronto Stock Exchange (TSX). For more information, visit

For further information:
Michel Dubé
Principal, Compensation
T : 514.392.7802
Richard Béliveau
T : 514.392.7853