SALARY FORECASTS

2022special report

MESSAGE FROM THE PRESIDENT AND CEO

THE CPQ WOULD LIKE TO THANK THE PARTICIPATING FIRMS FOR THEIR CONTRIBUTIONS IN PREPARING THE 2022 SALARY FORECASTS:

Despite the coming of the fourth wave, the outlook of the economic rollout over the coming months offers some optimism. Different industry sectors that suffered shutdowns are slowly, but surely, getting back on track. Government support measures are also answering the call.

Still, Quebec employers aren’t out of the woods yet. The labour short-age is intensifying, and salary levels are bearing witness to this though not equally across all sectors. We may now also be faced with what experts are calling “The Great Resignation.” The pandemic having compelled many members of the workforce to rethink their priorities, some analysts foresee a period during which the number resignations will jump. According to Microsoft’s 2021 Work Trend Index, a signifi-cant proportion of workers around the world (42%) are thinking about leaving their current job in the coming year. Employers would be well advised to keep this in mind and look at shoring up their talent reten-tion efforts.

Salary considerations aside, a number of now inescapable questions are also elbowing their way into the mix, such as work-life balance and the extent to which telecommuting will be maintained going forward, not to mention vaccine passports and vaccination mandates. Each as salient to workers as they are to employers, they are now all part of the equation when it comes to attracting and retaining talent.

In looking at salaries, Canada, Quebec finds itself leading the pack with projected salary increases slightly higher than the national average.

With such a unique landscape before us, the CPQ’s Special Report on Salary Forecasts gives employers an opportunity to better understand key pay trends for the coming year. With the economic recovery un-mistakably underway, the launch of this publication takes on all the more meaning.

Thanks to the irreplaceable contributions of its partners, this CPQ spe-cial report offers employers expert projections to help them context-ualize and implement compensation strategies that are in tune with trends in different industry sectors and job categories.

Aimed at helping employers, managers, and human resource pro-fessionals navigate the uncertainty and turbulence that continue to characterize the landscape, the projections developed by our partner compensation experts should help light the way.

Cordially,

Karl Blackburn

A total of 829 organizations from all industry sectors across Canada and representing a broad cross-section of sales figures took part in the 39th edition of our salary projections survey.

The LifeWorks annual Canadian salary projection survey reveals that non-unionized employees could see an average salary increase of 2.7% in 2022 excluding freezes, and 2.5% including freezes. In 2021, 12% of organizations froze salaries whereas 36% had done so in 2020. Only 3.3% of organizations anticipate doing so in 2022 which may be a sign of things getting back to normal. In terms of salary structures, we should see them rise by 2.3% excluding freezes, and 2.1% including freezes.

Parenthetically, 81% of organizations use salary structures to manage non-unionized employee salaries.

The highest projected average salary increases in Canada for 2022, ex-cluding freezes, are expected in wholesale trade (3.1%) and construction (3.0%) while the lowest projected average increases are expected in the information and cultural industries (1.9%).

LIFEWORKS’S SURVEY

AVERAGE SALARY INCREASE AND SALARY STRUCTURE PROJECTIONS (CANADA, BY INDUSTRY SECTOR)

INDUSTRY SECTOR

AVERAGE INCREASES PROJECTED FOR 2022

BASE SALARIES SALARY STRUCTURES

INCL. FREEZES EXCL. FREEZES INCL. FREEZES EXCL. FREEZES

Overall projections 2.5% 2.7% 2.1% 2.3%

Construction 2.9% 3.0% 2.3% 2.5%

Educational services 1.8% 2.0% 1.5% 1.8%

Finance and insurance 2.7% 2.8% 2.1% 2.1%

Health care and social assistance 1.8% 2.0% 1.7% 1.8%

Information and cultural industries 1.5% 1.9% 1.3% 2.2%

Management of companies and enterprises 2.8% 2.8% - -

Manufacturing 2.6% 2.7% 2.3% 2.4%

Mining and oil and gas extraction 2.4% 2.8% 2.1% 2.3%

Other services (excluding public administration) 2.4% 2.5% 1.9% 2.1%

Professional, scientific and technical services 2.9% 2.9% 2.1% 2.2%

Public administration 2.0% 2.4% 1.8% 2.1%

Real estate, rental and leasing 2.6% 2.8% 2.1% 2.3%

Accommodation and food services 2.5% 3.0% 2.2% 3.7%

Administrative, support, waste management, and remediation services 2.4% 2.4% 1.8% 2.8%

Agriculture, forestry, fishing, and hunting 2.7% 2.7% 1.8% 2.1%

Arts, entertainment and recreation 2.4% 2.4% 2.1% 2.5%

Retail trade 2.3% 2.4% 1.9% 1.9%

Transport and warehousing 2.5% 2.7% 2.1% 2.6%

Utilities 2.4% 2.4% 2.3% 2.6%

Wholesale trade 3.0% 3.1% 2.6% 2.6%

In Quebec, projected salary increases are slightly higher than the Canadian average, with average salary increases of 2.9% (excluding freezes), and 2.8% including freezes.

ABOUT LifeWorks is a world leader in offering in-person and virtual solutions to support the total wellness of people. We offer a range of personalized care to support our clients with their employees’ wellness and, in doing so, foster their organization’s success.

FOR MORE INFORMATION

Guylaine Béliveau CRHA, MBA Director, Consulting and Compensation Lifeworks guylaine.beliveau@lifeworks.com lifeworks.com

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Mercer has been conducting a series of pulse check compensation planning surveys to gather data on compensation budgets. Below are the results of the March 2021 survey, which looked at 2021 actual increases, as well as our preliminary September findings of planned salary increases for 2022.

2021 ACTUAL INCREASES — MARCH 2021 SURVEY

As organizations plan their “return to work”, the uncertainty due to COVID and what the remainder of the year may bring remains. And yet, while COVID continues to create challenges in many areas — from employee wellness to return-to-work policies to revenues and budget uncertainty, the labour market continues to pick up. Organizations that are looking to fill vacancies and retain top talent will need to be able to differentiate themselves from the competition.

2.5% The actual average merit increase delivered in 2021 was 2.5% but dips to

2.1% 2.1% when including those companies that did not deliver increases.

2.7% Total increases were slightly higher at 2.7%;

2.3% 2.3% including zeros.

1.6%Of those companies that indicated COVID-19 had a high impact on their financials, the average merit was 1.6% when including those that did not give increases

2022 PROJECTED INCREASES — SEPTEMBER 2022 SURVEY

In the September edition of the pulse survey which focused on projections for 2022, of the over 430 organizations that participated, 84% indicated that they are in the preliminary stages of their salary increase budget plan-ning. Only 6% indicated their budget has been approved by leadership or the board, while 10% had put forward their number for approval. At this point, just a few participants are planning to freeze salaries in 2022, however, 14% of companies are still undecided.

For those that reported a proposed merit increase budget, the average for all employees, including zeros (i.e., freezes) is 2.6% – comparable to 2019 levels. When excluding zeros, that number increases slightly to 2.7%. Total increase budgets, which include market, promotion and other adjustments, were reported to be 2.9% excluding zeros. In Greater Montreal, merit is forecasted to be 2.7% and the total increase budget is 3.1%, with no reported salary freezes.

MERCER’S SURVEY

AVERAGE INCREASES, INCLUDING FREEZES

2022

2021

2020

2019

0 0.5 1 1.5 2 2.5 3 3.5

Total Increases Merit Increases

FINAL THOUGHTS

While salary increase data is a key input for human resources professionals, these are not normal times. As the economy recovers, the job market is heating up. Salary increase budgets are one of many levers that organizations can pull and they should take into account the organization’s economic situation, the competitive pay positioning of its critical jobs and sought-after skills, any planned hiring, and the organization’s differentiation strategy.

ABOUT Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 coun-tries and the firm operates in over 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 76,000 colleagues and annual rev-enue of over $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment.

FOR MORE INFORMATION

Jean-François Thibault Principal and Career Lead, Eastern Canada Mercer jean-francois.thibault@mercer.com mercer.ca

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NORMANDIN BEAUDRY’S SURVEY

This summer, more than 600 organizations across Canada took part in the 11th edition of the Salary Increase Survey.

Proactive management of salaries is your best strategy in response to the current labour shortages and economic recovery. Based on the results of this survey, the demographic profile of your workforce and your compensation infrastructure, you can start working on calculating, targeting and, finally, convincing your management committee on the importance of taking action.

Full details of the survey are available on our interactive platform.

� While more than 20% of companies were planning on freezing salaries last summer, only 8% of participating organizations actually froze wages in 2021 and 3% of them intend to freeze salaries in 2022.

� While economic indicators support a recovery, salary increase budgets remain reasonable as they are at approximately the same level as be-fore the pandemic.

� For a third consecutive year, the average budget in Quebec, excluding freezes, is greater than or equal to 3%.

� Although the pandemic is synonymous with decreased revenues for many organizations, others seized this opportunity to accelerate their growth. This was especially the case for the technology sector, which averaged salary increases of 3.7%.

� The average salary structure increase granted in 2021 in Canada was 2.1%, excluding organizations that decided to freeze their salary structure. The average drops to 1.7% when those organizations are taken into account, which is due to 13% of organizations freezing the salary structure of non-unionized employees.

OVERALL SALARY INCREASES FOR NON-UNIONIZED EMPLOYEES BY PROVINCE

PROVINCES

TOTAL SALARY INCREASE BUDGET SALARY STRUCTURE INCREASE

GRANTED IN 2021 PROJECTED FOR 2022 GRANTED IN 2021 PROJECTED FOR 2022

N* EXCL. FREEZES

INCL. FREEZES

EXCL. FREEZES

INCL. FREEZES N* EXCL.

FREEZESINCL.

FREEZESEXCL.

FREEZESINCL.

FREEZES

Quebec 355 3.0% 3.0% 3.0% 3.0% 291 2.3% 2.1% 2.3% 2.3%

Ontario 226 2.8% 2.6% 2.8% 2.7% 161 2.1% 1.7% 2.1% 2.0%

British Columbia 267 2.6% 2.4% 2.8% 2.7% 183 2.2% 1.6% 2.3% 2.1%

Alberta 157 2.5% 2.1% 2.7% 2.5% 111 2.1% 1.2% 2.1% 1.8%

Saskatchewan 83 2.4% 2.2% 2.5% 2.4% 59 1.9% 1.4% 1.9% 1.8%

Manitoba 73 2.5% 2.2% 2.6% 2.4% 52 1.9% 1.3% 2.0% 1.8%

New Brunswick 53 2.6% 2.3% 2.6% 2.4% 44 1.9% 1.3% 2.0% 1.7%

Nova Scotia 59 2.5% 2.4% 2.6% 2.6% 49 1.9% 1.6% 1.9% 1.9%

Prince Edward Island 19 1.9% 1.6% 2.2% 2.2% 18 1.7% 0.9% 1.9% 1.9%

Newfoundland and Labrador 41 2.6% 2.5% 2.8% 2.8% 37 1.9% 1.3% 2.0% 1.9%

Yukon 15 2.3% 2.2% 2.7% 2.7% 11 1.2% -- 2.0% 2.0%

Nunavut 4 2.5% 2.5% 2.4% 2.4% 4 -- -- 2.2% 2.2%

Northwest Territories 11 2.8% 2.8% 2.5% 2.5% 7 1.9% -- 2.4% 2.4%

CANADIAN AVERAGE 2.8% 2.6% 2.8% 2.7% 2.1% 1.7% 2.2% 2.0%

* N = number of organizations

ABOUT Founded in 1992, Normandin Beaudry is a leader in actuarial services consulting and total rewards. Close to 300 employees working out of Montreal, Toronto and Quebec City serve clients across Canada in eight areas of expertise: Pension and Savings, Pension Plan Administration, Investment Consulting, Group Benefits, Compensation, Health, Performance, and Communication.

FOR MORE INFORMATION

Anna Potvin Senior Consultant, Compensation Normandin Beaudryapotvin@normandin-beaudry.ca normandin-beaudry.ca

EVOLUTION OF SALARY INCREASES IN QUEBEC (EXCL. ZEROS)

Projected Granted

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Salary projections for 2022 are very similar to the ones seen pre-pandemic. Given the current job market, we had expected to see salary increase budgets rise. That being said salary projection surveys are led in the summer— too soon to have all budget information on hand— and focus on the regular salary review cycle. It is quite possible that amounts earmarked for compensation were not entirely captured.

SALARY INCREASES

Actual and projected salary increase budgets come in at a median of 2.5%, but the average rises to 2.9%, excluding freezes. The table below presents salary increase budgets for a sample of industry sectors from our survey.

Of the organizations surveyed, 52% have additional budgets for specific instances involving non-unionized employees. Total additional budgets projected for 2022 across these organizations come in at an average of 2.1%, which translates to a projected total budget average of 4% for 2022. On average, salary structures will be adjusted by 2%.

Nearly all organizations (92%) indicated that they faced challenges in terms of employee recruitment and/or employee retention. 70% of or-ganizations adjusted their entry-level salaries to help recruit qualified employees and 90% saw an increased trend in hiring demand, particu-larly for jobs in production and finance.

PAY TRANSPARENCY

Results reveal that 35% of organizations saw improvement in pay trans-parency. Beyond disclosing “how much,” we know that communicating why and how compensation policy is applied helps improve employee perception.

In 56% of organizations surveyed, total compensation policy is disclosed to employees by managers, among which 80% have the resources and tools to do so. Since managers are essentials to the relationship employ-ees have with their organization, they need to be involved in communicat-ing compensation decisions.

Pay transparency remains limited with 80% of organizations disclosing no more than job-specific pay scales and 24% disclosing no direct com-pensation information other than salary. Only 26% of organizations offer their managers some form of total compensation training.

Considerable pressure surrounding how total compensation is packaged should bring organizations to make compensation policy more transpar-ent for employees and to increasingly invest in their managers.

PCI COMPENSATION CONSULTING’S SURVEY

ABOUT Recognized as a strategic partner by hundreds of organizations in the private, public, parapublic, not profit, and vol-untary sectors, PCI offers a full range of total compensation services at the management and governance level, and at all employee category levels. For over 20 years, PCI has helped clients stand out in their complex and continually evolving environments by providing them with customized compensation programs that not only respond to the realities of their business but also leverage industry best practices.

FOR MORE INFORMATION

Evelyne Gaudreau Consultant PCI Compensation Consultingegaudreau@pcicompensation.com pcicompensation.com

SALARY INCREASES

INDUSTRY SECTOR% ORG.

W/FREEZE

ACTUAL 2021 % ORG. W/FREEZE

PROJECTED 2022

P50 AVERAGE P50 AVERAGE

Arts and recreation / Accommodation and food services 18.8% 2.5% 2.5% 18.8% 2.0% 2.4%

Distribution / Wholesale and retail trade 5.3% 2.7% 4.1% 0.0% 2.6% 4.1%

Manufacturing / Construction / Processing 6.7% 2.5% 3.1% 2.7% 2.5% 2.8%

Insurance and finance / Real estate 5.9% 2.5% 3.1% 5.9% 2.5% 3.0%

Professional, scientific, technical, administrative, and management services / Business services

5.9% 2.7% 2.9% 0.0% 3.0% 3.0%

Information and communication technology / Telecommunications 5.9% 2.8% 4.4% 0.0% 3.0% 3.0%

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WILLIS TOWERS WATSON’S SURVEY

The 2021 Salary Forecast Survey was led by Willis Towers Watson Data Services from April to June 2021 among 679 Canadian businesses across all industry sectors. It presents data on salary increases as a percentage of past years and the current year and also includes projections for the coming year.

CANADIAN EMPLOYERS ANTICIPATE INCREASINGLY GENEROUS SALARY INCREASES IN 2022

Salary increases are making a comeback. Canadian businesses project offering greater salary increases in the coming year as they recover from the pandemic’s economic fallout and invest increasing efforts towards employee recruitment and retention.

Survey respondents project an average 2.7% increase in salaries for exec-utives, management, professionals, and support staff in 2022.

Production and manual labour employees can expect an average 2.6% increase in 2022, compared to the 2.2% they saw this past year, this rise against a backdrop of an exploding demand for labour and a shortage of hourly workers and of certain professionals with rare and highly sought-after skills.

HIGHER INCREASES FOR HIGHER-PERFORMING EMPLOYEES

Survey results revealed that businesses continue to reward their best employees with increasingly generous raises compared to those earned by their lesser performing counterparts. The highest performing man-agers and professionals earned themselves an average 4.4% increase this year, representing 83% more than the increases granted to employ-ees with an average performance. This same trend is also seen among support staff and hourly workers.

ABOUT Willis Towers Watson is a world-leading consulting and brokerage firm helping clients all around the world find solutions that turn risk into avenues for growth. With roots dating back to 1828, today Willis Towers Watson is 45,000 employees strong across more than 140 countries and markets.

FOR MORE INFORMATION

Stéphane Paré Senior Director Willis Towers Watsonstephane.pare@willistowerswatson.com willistowerswatson.com

SALARY INCREASES BY INDUSTRY SECTORAVERAGE PROJECTED INCREASES

SALARIES STRUCTURES

INCL. FREEZES EXCL. FREEZES INCL. FREEZES EXCL. FREEZES

NUMBER OF RESPONDENTS 679 652 345 282

ALL JOB CATEGORIES COMBINED 2.8% 2.9% 1.7% 2.1%

INDUSTRY SECTORS

Energy, mines, oil and gas 2.3% 2.5% 1.1% 1.9%

Manufacturing 2.8% 2.9% 1.9% 2.2%

Utilities 2.4% 2.8% 1.2% 1.7%

Transport and warehousing 2.7% 2.7% 2.0% 2.2%

Wholesale and retail trade 2.9% 3.0% 1.4% 1.8%

Finance and insurance 2.7% 2.9% 1.6% 2.0%

Professional, scientific and technical services 2.8% 3.0% 1.5% 2.0%

Information and communication technology 2.6% 2.7% 1.8% 2.1%

JOB CATEGORIES

Upper management and executives 2.7% 2.9% 1.7% 2.2%

Other managers and professionals 2.7% 2.8% 1.7% 2.1%

Operations and production 2.6% 2.8% 1.7% 2.2%

Administrative and technical support staff 2.7% 2.8% 1.7% 2.1%

NUMBER OF EMPLOYEES

Under 300 employees 2.9% 3.0% 1.9% 2.2%

300 – 999 employees 2.7% 2.9% 1.7% 2.2%

1,000 – 4,999 employees 2.8% 2.8% 1.7% 2.0%

5,000 or more employees 2.4% 2.5% 1.4% 1.9%

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Conseil du patronat du Québec1010 Sherbrooke Street West, Suite 510Montreal (Quebec) H3A 2R7

Tel.: 514.288.5161Toll free: 877.288.5161cpq.qc.ca

With the collaboration of several of the best compensation consulting firms, the CPQ launched and presented the 2022 salary forecasts report during a videoconference activity on Tuesday, September 28, 2021.