Chief economist warns organizations against hasty pay increases in the face of rising cost-of-living crisis
Canadian employers are raising salaries and increasing benefits to ensure they’re recruiting and retaining top talent, a new report has found, despite stark economic reminders to act prudently.
Research from Robert Half revealed that 42% of employers are now offering higher starting salaries, while 79% of companies that raised base compensation for new hires have begun making pay adjustments for current staff. In terms of benefits, nine in 10 employers have introduced new perks to their workforce. These include:
- Mental health resources (39%)
- Flextime (38%)
- Wellness programs (38%)
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Currently, the Canadian labour market is intensely tight, meaning candidates and employees have the advantage when negotiating for better pay and perks.
"Keeping in lockstep with current compensation trends is a critical element of recruiting and retaining skilled talent, as is providing perks and benefits that support employees' overall well-being," says David King, senior managing director at Robert Half Canada.
However, offering wage hikes to employees shouldn't be long-term, according to Pedro Antunes, chief economist at The Conference Board of Canada, who previously warned employers about being too hasty.
"If employers are forced to increase wages because of pressures in labour markets, they counter that by increasing prices. We end up with this wage/price vicious cycle that doesn't help employees improve their real purchasing power," the economist told HRD. "In the end, this can lead to even higher interest rates, adding to the risk of a recession."
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Antunes instead suggested looking at one-off or temporary measures that would help staff remain afloat in the middle of a cost-of-living crisis.
"That can help get inflation down over the longer term, benefiting both households and businesses," he said.
More wage talks to come
Meanwhile, Robert Half’s report found that employees plan on broaching the subject of pay rises sooner rather than later. In fact, 34% of professionals plan to ask for a raise by year-end if they don’t get one or feel unsatisfied with what they received. Another 47% of employees said they’re more likely to request a higher starting salary today than they were a year ago. Their confidence in the labour market, which experts say currently favours them, is also on the increase. The report found that 57% of professionals believe they’re in the driver's seat when it comes to negotiating perks and pay, while 37% said they’d consider changing employers for a 10% increase in pay.
Read more: Half of your employees think they deserve a raise
King advised professionals to also weigh in other factors, such as flexible work options and a supportive company culture, in evaluating their overall job satisfaction.
"Before entering a negotiation or making a career move, professionals should take the time to reflect on what will ultimately bring them the greatest value and happiness," the official added.