Salaries to go up by 3.1% next year: Conference Board

“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.

The Conference Board report is based on a survey of 381 predominantly large and medium-sized organizations that was done in the summer — when the economic outlook appeared brighter than it does now.

The analysis was released Tuesday just as the Bank of Canada was lowering its 2011 and 2012 growth forecasts, to reflect the negative impact of the European debt crisis and slowing growth in Asia since the previous estimate in July.

The Conference Board study found the smallest wage increases were expected in Ontario and Atlantic Canada, where workers could see average gains of 2.7% next year.

By industry, the weakest growth was expected in retail trades, telecommunications, and manufacturing — at about 2.5%. Many of those types of jobs are focused in central Canada.

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% and 4.1%, respectively.

Saskatchewan and Alberta, which have large stores of resources such as potash, uranium, oil and gas, are expected to lead the provinces next year with average wage gains of 3.9% and 3.6%.

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.

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.

“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 said they faced labour shortages, Thorpe said, adding that unemployment rates in the Western provinces have fallen faster than the national average.

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

Dale Pauls, recruiting manager at GFR Recruiting, which hires engineers for the oilsands, says based on the increasing need for those professionals, there will likely be a boost in salaries as companies offer more to land the people they want.

“There’s a shortage of engineers,” he said.

“As we try to recruit those engineers, you’re going to see a jump (in salaries).”

As competition heats up for skilled employees, junior engineers that are just starting out now makes about $60,000, an increase from five years ago, he said.

By contrast, retailers have been finding it easier to attract employees, telecom companies are dealing with small profit margins and little money to increase salaries and manufacturers are coping with the impact of a higher Canadian dollar that makes exports less competitive.

The first members of the hugely influential baby boomer generation turn 65 this year. That means more Canadians are beginning to leave the labour force, reducing the workforce of the oil sector alone by 30% in the next decade, according to a report by the Petroleum Human Resources Council of Canada

Projections of the oil industry’s workforce by the Petroleum HR Council suggest 39,000 workers will be hired just to replace workers lost due to retirement.

In addition to engineers, the council says more employees are needed in the maintenance trades, accounting, field operations, rig crews and environmental and regulatory specialist fields.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 — good news for 1.4 million unemployed Canadians.

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

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