Compensation Planning Outlook 2006: Pay Pressure Builds as Labour Markets Tighten

Compensation, always a top-of-mind issue, is explored in-depth in this year’s outlook. The outlook covers such topics as base pay increases and projections, annual variable pay, long-term incentives, human resources challenges and priorities, recruitment and retention, performance management, turnover, absenteeism, benefits, collective bargaining issues and anticipated wage settlements for the year ahead.

Canadian employees can expect a healthy increase in real wages again in 2006. The average non-union pay increase for 2006 is projected to be 3.4 per cent, almost 1.5 percentage points ahead of the 2.0 per cent inflation rate forecast for the year ahead.

Maintaining competitive market position is still a priority for compensation planners, but in light of the tightening labour market, recruiting and retaining employees is a growing imperative. The challenge for rewards planners is to find the best ways to keep talent, particularly to retain older workers.