MRO Magazine

2012 salaries to take biggest jump in several years: Conference Board


Industry

October 25, 2011
By PEM Magazine

Rising demand for skilled trades and other workers in Western Canada’s booming oil and gas sector will push national wages up by more than three per cent next year, the Conference Board of Canada predicts.

Canadian workers can expect average salary increases of 3.1 per cent for 2012 — higher than the actual average gains of 2.7 per cent and three per cent in 2010 and 2011 respectively, the think tank said in a compensation outlook report Tuesday.

“The signal is to people that are in the labour market already … that they are, for next year, going to be receiving higher wage increases than they’ve seen for the last several years,” said Karla Thorpe, the board’s director of leadership and human resources research.

In Alberta, expansion of oilsands projects and a growth in pipelines and other infrastructure supporting the energy sector have created labour shortages for everything from carpenters and electricians to welders, steam fitters and construction workers.

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Big companies who need skilled workers have to offer higher wages and sometimes are forced to turn to workers from the United States, other parts of Canada or abroad to meet their labour needs.

The oil and gas industry, followed by miners and other resources companies, are expected to see the biggest wage increases, with gains of 4.3 per cent and 4.1 per cent, respectively.

Saskatchewan and Alberta, which have large stores of resources like potash, uranium, oil and gas are expected to lead the provinces next year with gains of 3.9 per cent and 3.6 per cent.

“We’ve certainly seen already in 2011 that the oil and gas sector is revving up,” said Thorpe.

In Alberta, three quarter of employers surveyed say they face labour shortages, Thorpe said, adding that unemployment rates in the Western provinces are falling faster than the national average, pushing upward pressure on wages.

For example, Saskatchewan’s jobless rate sits at five per cent, much lower than the current 7.1 per cent national average.

Meanwhile, the smallest wage increases are expected in Ontario and Atlantic Canada, where workers could see gains of 2.7 per cent next year. By industry, the weakest growth is expected in retail trades, telecommunications, and manufacturing. Many of those types of jobs are focused in central Canada.

The reasons for the slower growth in those sectors vary, with retailers finding it easier to attract employees, telecom companies dealing with small profit margins and little money to increase salaries and manufacturers coping with the impact of a higher Canadian dollar.

Still, the higher wage increases are also good news for the 1.4 million unemployed Canadians because they signal employers in many parts of Canada are feeling optimistic about future growth.

The economy has been posting solid jobs growth, with an impressive 61,000 new jobs churned out in September, taking the unemployment rate to the lowest level since December 2008.

Over the past year, the economy has created 294,000 new jobs, most full time and most in the private sector.

However, Thorpe warned Canadian companies are still cautiously watching for a potential downturn in the U.S. and Canadian economies, with an eye to adjust their salary distributions depending on how economic growth plays out.

Layoffs, downsizing, terminations and unrenewed contracts fell in 2011, as the 2008-2009 recession became more distant, she said.

The decline in so-called “involuntary turnovers” was focused in the private sector, while the public sector saw an increase as governments struggled to balance their books. That trend is likely to continue into next year, Thorpe said.

The report also found that more businesses said they planned to maintain their labour bases at current levels or increase them rather than downsize.

The average projected increase in base pay among non-unionized employees in the private sector is 3.2 per cent, while non-unionized public sector workers are expected to see increases of 2.6 per cent.

Anticipated wage increases for unionized employees are projected to be two per cent in 2012, with a 1.5 per cent rise in the public sector and 2.3 per cent gain in the private sector.

The Conference Board report is based on a survey of 381 predominantly large and medium-sized organizations that was done in the summer.