Most of us could use more money, but asking for a raise is a sensitive process: as an employee or job-seeker, you want to be paid fairly. And if you’re the employer, you want to attract and retain talent, but you don’t have unlimited funds.
Despite record low Canadian unemployment, real wages haven’t changed substantially, and our economic growth is expected to slow as interest rates rise. Yet a new Indeed salary study reveals that more than half (52%) of workers are definitely (24%) or possibly (28%) going to ask for more money in 2018. In fact, on average Canadians say that they would like to earn an average of $11,882.96 more per year to live comfortably.
With expectations like those, employers could be facing some awkward conversations in the near future. The key for both sides is research.
- Employees need to know what they’re worth and employers need to keep up with salary rates. What do similar jobs and levels of experience pay at different companies?
- Not all employees will use all benefits, but talent may be attracted to companies that support different goals and stages in life.
- A positive and flexible work culture can go a long way.
Let’s take a closer look at the results and what they mean for employers and job seekers.
83% of Canadians are dissatisfied with their salaries
Strikingly we find that an overwhelming majority of Canadians are generally unhappy with their incomes. Less than two in ten – 17% – said they were satisfied, with 83% saying they’d like to earn more. Given the sluggish pace of income growth, this may be unlikely to change any time soon.
As for how often Canadians receive pay increase, on average, most respondents received raises at their current companies within the last year. However, 38% saw increases more than a year but less than two years ago, and 20% said they had never seen a change.
We also see some regional variation. 42% of Manitobans received raises within the last year. In Ontario, 41% also received raises in the last year—however, 20% also said they haven’t gotten one so far. Other no-raise reports include Quebec at 22% and Alberta at 20%. British Columbia came out on top with the least number of respondents never having seen a raise: only 18%.
And of course, dissatisfaction can have negative consequences for employers. More than half of our respondents–53%–told us they would consider changing jobs to make more money, and 17% said they would definitely consider changing jobs.
Millennials are most likely to ask for a raise
With this lack of satisfaction, it’s little wonder that over half (52%) of the respondents told us that they are definitely (24%) or possibly (28%) going to ask for more money in 2018.
And as an employer, your most-likely candidates will be millennials: more than three in ten (33%) 25 to 34-year-olds said they are definitely going to ask for a raise, but only 16% age 55 and older are planning to.
One reason that millennials may be more likely to ask is that they are early in their careers, so they make less money than older employees.
But the oldest millennials are moving into leadership stages with the younger ones following close behind, so employers should think carefully about how to retain the best.
How much do employees feel they deserve?
Employers, then, should expect to negotiate. Regardless of age or gender, those seeking raises plan to ask for more than current economic conditions may allow.
Almost half (47%) told us they will ask for increases of 6% to 10%, and the majority will want, on average, 7%. Again, millennials are the leaders, with respondents aged 25 to 34 looking for an average increase of 8%, versus 45 to 55-year-olds and those who are 55+, who are planning to ask for 6% on average.
And there is a male-female divide: On average, our male respondents plan to ask for 8%, but females will seek 7%. This is considerably less stark than in the US, however, where more than half (54%) of men expect to ask for a 6%-10% salary increase, compared to just 41% of women.
58% of employees cite cost of living as justification for a raise
A rise in the cost of living is the number-one reason our respondents (58%) want raises. In November 2017, the annual inflation rate hit 2.1%, which means the average salary will buy that much less.
But many who are planning to ask simply feel they’ve earned it. Just under half (49%) of those who are planning to ask say they have performed well and should be rewarded.
Others will ask because they are dissatisfied. Nearly a third (32%) who are planning to ask for a raise this year say they have taken on extra responsibilities without an increase in salary, while almost a quarter (22%) will ask because they feel a raise is overdue.
Why are raises declined?
Among those who were refused raises, 63% were told that there wasn’t enough room in the budget, 15% were told they hadn’t worked in the organization long enough, and 22% were given no reason.
Strikingly, just over seven in ten (77%) women who had been refused were given the no-budget reason, vs. 54% of the men.
77% of employees open to improved benefits instead of a raise
When employers can’t offer salary increases, there are other ways of rewarding good work. In fact, around three quarters (77%) of our respondents indicated that they’d be open to improved benefits instead of a raise.
In order of perceived value, 38% were interested in more flexible work hours, 43% were interested in more holiday leave, and 44% expressed an interest in better healthcare benefits.
Province to province, there were some differences. In Quebec, 39% were willing to take more holidays instead of a raise, and in Alberta, 48% were open to improved healthcare benefits. Just under three in five (39%) British Columbians would consider flexible working hours.
However two out of five in Ontario said they wouldn’t consider benefits in lieu of money.
Conclusion: both sides should think about the long term
It’s clear there is some dissatisfaction on the employee side of the table, when just over three out of ten (32%) respondents think Canadian salaries are lower than average, and 80% feel they need an increased salary to be more comfortable.
To put it in perspective: in the introduction we mentioned that on average, Canadians would like to earn an average of $11,882.96 more per year to live comfortably. But almost a quarter of Canadians (23%) set their sights considerably higher, thinking they need to earn at least $16,000 more.
Employers should carefully consider the long-term value of each employee and the relationships they want to build with them. Larger raises may be appropriate for some, but for others, improved benefits can go a long way.
On the employee side, employees need to prepare well in advance for that salary conversation. Look for ways to measure and demonstrate how your initiatives have helped your employer, and look at job postings on Indeed.com to see how you compare to those job descriptions and salary ranges.
It’s also good to keep a journal year-round with notes about your successes. This will be particularly strong if you have solid evidence of the value you bring, and will save you time when you start planning for the discussion.
And finally: be realistic. Know what you’re worth, and if you’re asking for more than that, be prepared to be negotiated down. Upgraded benefits may be a good compromise, but having an employer who leads in a respectful way can also mean significant long-term opportunities for your career – and your non-work life. Sometimes, job satisfaction is worth more than extra gold.
Methodology: This survey was conducted by Censuswide on behalf of Indeed and surveyed 1,000 currently employed Canadians in December 2017.