portrait of two businessmen in warehouse
© Cathy Yeulet / 123RF Stock Photo

Covid-19 may have dealt a blow to your client’s chances of having their salary increase next year, according to Morneau Sheppell’s latest salary projection survey.

The survey of employers across Canada found that the base salary increase was 1.6% year over year in 2020, down from 2.4% in 2019. Base salaries are expected to increase by 1.9% next year — the first time the projected base salary increase has dropped below 2% since the 2008 financial crisis.

The projected 1.9% increase includes anticipated salary freezes. According to Morneau Sheppell, 36% of employers froze salaries in 2020. Almost half (46%) of the employers surveyed said they were unsure about whether to freeze salaries in 2021, and 13% had already committed to freezing salaries next year.

Forty-two per cent of employers in the arts, entertainment and recreation sector have committed to freezes in 2021, and one-quarter of employers in the educational services sector have done the same.

Freezes are less likely in other sectors. Fifty-eight per cent of employers in the real estate, rental and leasing sectors said they aren’t planning to freeze salaries, followed by 57% of employers in utilities; 56% of employers in agriculture, agriculture, forestry, fishing and hunting; and 51% of employers in finance and insurance.

Other sectors are experiencing a higher degree of uncertainty. More than two-thirds (68%) of employers in transportation and warehousing said they didn’t know if they would freeze salaries next year, followed by 58% of employers in accommodation and food services.

Expected salary freezes are most prevalent in Alberta, where 16% of employers said they are anticipating more freezes.

Just over three quarters (76%) of employers said Covid-19 had a negative impact on their revenue. Twenty-two per cent reported a severe decline, 34% reported a moderate decline and 20% reported a mild decline.

Morneau Sheppell’s survey includes responses from 889 organizations across Canada representing a cross-section of industries.