Salary Projections for 2021

by | Oct 21, 2020

Each year McConnell HR Consulting Inc. (MRHC) forwards information provided by the Ottawa Region Rewards Association (ORRA) outlining projected salary increases for the next year.   This information has become a trusted and valuable resource for our clients in planning for next year.  Unfortunately, it appears that ORRA is not compiling salary information this year.

As a result, we would like to share what we have been able to research.  As expected, the data varies.

Conference Board of Canada (National) – projected average increases of 2.1%.
They caution that 40% of survey respondents are still undecided.
14% of respondents plan to freeze salaries for 2021.

Normandin Beaudry (for Ontario) – projected average increases of 2.5%.
They caution that 40% of survey respondents are still undecided.
20% of their respondents plan to freeze salaries.

Morneau Shepell (National): projected average increases of 1.9%.
They caution that 46% of survey respondents are still undecided
13% of respondents plan to freeze salaries.

Mercer (National):  – projected average increase of 2.4%.
They caution that 40% of survey respondents are still undecided.
5% of respondents plan to freeze salaries.

Québec Associations Services Centre – CQSA (For Non-Profits in Quebec): – projected average increase of 2.1%.
33% of respondents plan to freeze salaries.

Annual year to year inflation in Ottawa is down to 0.1%.
The federal public sector unions are trending in the 2.0% range for negotiated settlements.
Provincial (Ontario) legislation limits raises for public sector employees to one percent annually.

MHRC’s View

This uncertainty in October is very unusual, but a sign of the times.It is our firm’s belief that the freezes and ‘don’t know yet’ group are mainly from the private sector; especially those companies hit hardest by the pandemic, i.e. hospitality, service, retail, tourism, travel etc.  The Association / NPO sector in Ottawa tends to exist in an economic bubble, due to the nature of their funding and the presence of the federal government.  We rode through the 2008-09 recession unscathed while locales like the manufacturing sector in SW Ontario suffered deeply.

Although we do not normally offer an interpretation of the data, our recommendation for our clients regarding 2021 is:

  • For those with salary ranges, freeze them. This means no structure movement.
  • We do not recommend providing a pure COLA (Cost of Living Adjustment) based on inflation, due to current inflation being so low. Organizations could choose to call the salary increase a ‘market adjustment’ to keep up with expected movement in the sector. I.e. 2%.
  • For average actual salary increases based on merit or progress through the range, we would recommend up to 2%. Unless of course, you have a budget and a merit pay policy that allows for greater than ‘average’ increases.

Since many organizations have accepted virtual working arrangements for most staff (present and future), now more than ever it is critical for organizations to ensure they are paying competitively in order to successfully attract and retain top talent/key employees.

We hope this analysis and recommendation have been helpful!  Wishing you all a safe end to 2020.