TORONTO, ONTARIO--(Marketwire - Aug. 28, 2008) - Despite the current state of the economy - which has been marked by the credit crisis, energy cost increases and currency fluctuations - substantial salary increases are still expected in Canada for 2009.

The current economic uncertainties do not change the reality of an aging workforce and tight labour markets. As a result, the need to attract and retain employees remain one of the key issues for a majority of Canadian employers, including 70% of employers in Western Canada and approximately 60% in Central Canada, according to the latest compensation trends survey conducted by Morneau Sobeco.

Participating organizations are less optimistic than in previous years, as the net proportion of employers expecting significant increases in revenue next year went from 18% in 2006 to 16% last year and to only 8% this year. While one quarter of all Western Canada respondents still expect significant increases in staff level next year, only 9% of employers in Ontario expect significant growth and almost 7% anticipate significant downsizing.

The average salary increase budget of Canadian employers for 2009 is 3.5% - up from 3.3% last year - or 4.1% including provisions for promotional increases and special adjustments, up from 3.7% last year.

Again this year, the highest increases are expected in Alberta, with an average salary increase budget of 4.8% or 5.6% including provisions for promotional increases and special adjustments. The average salary increase budget of our respondents according to their region is as follows.

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                Average Salary    Provisions for Promotional    Total
               Increase Budget(i)      Increases and Special
                                                 Adjustments
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Canada                     3.5%                          0.6%     4.1%
British Columbia           3.8%                          0.3%     4.1%
Alberta                    4.8%                          0.8%     5.6%
Prairies                   4.1%                          0.5%     4.6%
Ontario                    3.3%                          0.5%     3.8%
Quebec                     3.3%                          0.7%     4.0%
Atlantic Provinces         3.2%                          1.1%     4.3%
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(i) Excluding promotional increases and special adjustments

By job category, average salary increase expectations in Canada vary between 3.2% for operation and production staff, and 3.5% for executives (excluding promotional increases).

Mining and gas extraction companies are reporting the highest salary increase expectations ranging from 4.0% to 5.2% depending on job category (excluding promotional increases) while the lowest increases are expected from companies fabricating metal products, ranging from 2.2% to 3.0%.

The top benefit issue for half of employers in 2009 continues to be health care costs while disability management is a key issue for one-third of respondents.

Pension investment returns is a key issue for one-third of respondents. "Following four years of double digit returns, pension funds are experiencing a second year of poor investment returns and are facing increased market volatility," says Jean Bergeron, a Director in Morneau Sobeco's Montreal office.

Almost two-third of all employers with defined contribution pension plans are planning to provide investment education to employees. Furthermore, 45% of respondents are planning to offer pension or benefit information sessions and one-third of employers are planning to offer retirement planning sessions.

Finally, the communication of total rewards is a key issue for almost 40% of employers, going into 2009. Thirty-five per cent are planning to review or introduce total compensation statements next year.

"Employee communications and, in particular, total rewards statements are increasingly being recognized as key employee retention tools," says Andrea Nasello, Principal of Morneau Sobeco's Communication Practice in Toronto. "Demonstrating the full value of the investment an employer makes in its employees and engaging them in truly understanding the elements of that investment have a significant impact on employee morale and job satisfaction."

The survey conducted across Canada between June and August covered 282 organizations representing over 840,000 employees. This is Morneau Sobeco's 26th Annual Compensation and Trends Projections Survey.

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