danaeris | That time of year: RAISE TIME!

It's that time of year. Yes, in the next month or two, those of us who are employed will (hopefully) be getting glowing reviews, followed by respectable raises.

But what IS a respectable raise?

A look at survey highlights from Hay Group, Hewitt Associates, Mercer, Morneau Sobeco and WorldatWork
By Uyen Vu

Below are a few highlights from the salary surveys.

Hay Group — The overall weighted average across all sectors is 3.5 per cent, including skills premiums if applicable. Pay in the financial sector leads the pack with an overall average of 3.7 per cent and a range between 3.1 per cent for non-unionized production workers and 4.0 per cent for CEOs. In the industrial sector, the average is 3.5 per cent and increases range from 2.8 per cent for unionized production workers to 3.6 per cent for CEOs. In the broader public sector, the average is 3.3 per cent, and increases range from a low of 3.1 per cent for field sales and clerical staff to 3.8 per cent for CEOs.

Hay Group’s 2007 survey is based on information obtained from 574 organizations, including 388 in industrial, 97 in financial and 155 in the broader public sector.

Hewitt Associates — An average salary increase of 3.7 per cent is projected for all employee groups and industries, up from 3.6 per cent actual increase in 2006, 3.4 per cent in 2005 and 3.3 per cent in 2004. The projected increases range from 3.0 per cent for unionized employees to 3.9 per cent for executives, up from 2006 actual increases of 3.1 per cent and 3.8 per cent respectively.

In last year’s survey, two per cent of respondents expected to freeze salaries in 2006. That share is down to one per cent in 2007. More employers (36 per cent, compared to 30 per cent in 2005 and 26 per cent in 2004) are granting lump-sum payments instead of increasing salaries.

Information for Hewitt’s Canada Salary Increase Survey was gathered from 465 organizations, including 260 in services and 198 in manufacturing.

Mercer — Nationally, the salary increase for 2007 is projected at 3.7 per cent, up from 3.4 per cent last year. The vast majority of organizations are planning increases of between 3.1 per cent and 4.0 per cent across all employee categories, with no respondents planning salary freezes for 2007. The lowest increases are expected in hospitality and tourism, at 2.9 per cent. The highest are expected in utilities, at 4.1 per cent.

More than 30 per cent of organizations say they’ve increased pay differentiation based on performance, and more than 12 per cent are considering it. Short-term incentive plans, based on performance against criteria within the year, are now used with more than 88 per cent of executives, 86 per cent of management, 76.5 per cent of sales staff and 65.5 per cent of non-sales staff.

Mercer’s 2007 Compensation Planning Survey was derived from data from 409 organizations, representing 2.1 million unionized and non-unionized employees in Canada.

Morneau Sobeco — Salaries for 2007 are expected to increase by 3.4 per cent, up from 3.2 per cent last year. The lowest increases are seen in the metal manufacturing sector, where salaries are expected to rise by only 2.2. per cent for workers and 3.0 per cent for executives.

Short-term incentive programs are becoming more prevalent, with half of surveyed companies now providing bonuses to all employees, up from 22 per cent five years ago.

Data for Morneau Sobeco’s Compensation Trends and Projections Survey is collected from 350 organizations, representing one million employees.

WorldatWork — A national average increase of 3.8 per cent is projected for 2007, up from 3.5 per cent in 2005, with the public administration sector leading at 5.3 per cent in 2006.

The survey also found 87 per cent of organizations report using variable pay, relatively the same as a year ago. Lump-sum increases are most prevalent for management salaried employees and least prevalent among officers and executives.

The WorldatWork Salary Budget Survey had the participation of 232 Canadian organizations representing 590,000 employees. This is the first year the survey captured data by province and metropolitan area in Canada.

OK, so depending on your sector, an average raise is projected to be anywhere from 2.2 per cent (for metal manufacturing workers) to about 5.3 per cent (for public administration professionals).

But there's what's average, and what's fair, right?

So, what is inflation doing? I think Bank of Canada expects inflation to, on average, be 2.7 per cent each year, but that doesn't mean that it was 2.7 per cent THIS year.

In fact, according to Stats Can, including energy prices (which dropped drastically), the consumer price index has only increased about 0.7 per cent, as of September. If you remove energy from the picture, the inflation increases to between 1.5 and 1.8 per cent during the same period.

So there you have it. If you do better than 1.8 per cent, you're definitely actually getting a raise; it's just a pathetic raise. If you do better than 5.3 per cent, you're getting an exceptional raise. Less than that MIGHT be exceptional, depending on your sector.