Report: Only 13% of Canadians are Happy With Their Current Salary

Compensation is a critical component of employee satisfaction. A good salary is not only a key consideration for job seekers when choosing to accept an offer, but it can also entice workers to remain at a company.

Typically, a tight labour market will result in higher wages. After all, in a job seeker’s market, companies need to pay competitive salaries in order to attract and retain talent. However, while Canada’s employment rate remains low, this hasn’t yet translated into wage growth. As a result, sensitive conversations around compensation are likely on the horizon for many employers.

If given the choice, most of us would opt to make more money. But, how many workers in Canada are actually planning to ask for a pay raise this year? Who’s most likely to ask for one? And, how much are they going to ask for?

Indeed recently tackled all of these questions and more in a recent survey of 1,000 workers in Canada. Let’s take a look at the results.

53% of workers in Canada are planning to ask for a raise in 2019

Our survey shows that the majority of workers in Canada are discontent with their current salaries. Only 13% of workers in Canada say they are satisfied with their current salary – down 4% since last year, demonstrating that salary satisfaction is steadily declining. Moreover, nearly nine in 10 people (88%) would like to earn more in order to live comfortably in Canada. In order to do so, respondents say that they’d like to earn, on average, an additional $11,430.

Given workers’ dissatisfaction with their salaries, it’s no wonder that they’re planning to take action this year to earn more. Over half (53%) of workers in Canada are definitely (21%) or possibly (32%) going to ask for a pay raise in 2019.

When looking at the frequency of pay raises, on average, respondents received a pay increase approximately a year and a half ago (1.53 years), with 45% of respondents receiving a salary increase between one to two years ago. However, 14% of respondents state they’ve never seen a pay change. So while wages are in fact going up, they’re not increasing at the desired rate. It’s projected that Canadian employees will witness a pay increase of 2.8% in 2019. However, our survey reveals that, on average, respondents want a 6% increase, down slightly from 7% in 2018.

58% of millennials are planning to ask for a raise in 2019

Some groups are more likely to ask for a raise this year. While 51% of workers aged 55 and above are definitely or possibly going to ask for a raise, millennials are more likely to request one. In fact, 58% of respondents aged 25-34 say they’re going to ask for a pay raise in 2019. Not only do Millennials tend to earn less, but they’re often faced with student debt as well as high housing costs and increasing interest rates, making it much more difficult to save.

Men are also more likely to ask for a raise – 24% of male respondents will definitely be asking for a pay raise in 2019, compared to 20% of female respondents. Men are also likelier to ask for more – 44% of male respondents are planning to ask for a 6% to 10% increase compared to approximately 36% of female respondents. Instead, women are more likely to be conservative in their demands, with more than half (59%) requesting for a raise of up to 5%.

56% of respondents are asking for a raise due to increased cost of living

While the reasons for asking for a raise vary, 56% of respondents cite cost of living as a major motivator. This was the leading motivator in last year’s survey as well, an indication that workers’ frustrations have persisted. To put this into perspective, in the third quarter of 2018, Canadians owed nearly $1.78 in credit market debt, which includes consumer credit and mortgage and non-mortgage loans, for every $1 of disposable income.

Merit was also noted as a reason for wanting a pay increase, with 53% of respondents stating that they feel they’ve earned a raise due to good performance. Moreover, 34% of respondents say that they’ve taken on more responsibility without any financial reward.  

Over half of respondents (51%) say they’re in some capacity influenced by knowing their colleagues’ salaries. Just over three in 10 (31%) of respondents say they are influenced to ask for a pay increase when knowing their co-workers’ salaries as they believe they should be paid more than them.

Nearly a quarter (25%) of respondents planning to ask for a pay raise in 2019 are doing so because their salary increase is overdue.

Reasons employers decline pay increases

While it’s great to have open and honest conversations about compensation, employees’ wishes aren’t always granted.

More than half of respondents (59%) say that they’ve been refused in the past because there was no room in the budget. Strikingly, 20% of respondents say no reason was given. Lastly, 10% state that their employer said they hadn’t worked there long enough.

Regardless of why a company might turn down a request for a raise, compensation is a big consideration for employees when decided to stay at a company. Many workers believe the best way to get a significant pay increase is to change companies. So much so that 60% Canadian respondents would definitely or possibly consider changing companies in order to secure a pay raise, with 21% stating that they definitely would consider changing companies.

How to handle compensation conversations

Conversations around pay increases must be handled delicately. Here are some strategies that will help guide you:

  1. Keep up with salary rates: What do similar jobs and levels of experience pay at different companies? A well-prepared employee will broach the subject of a pay raise having done this research. It’s not only critical for employees to know what they’re worth, but employers need to keep up with salary rates as well. Having an understanding of this will be one of the factors that help you determine whether a pay raise is warranted.
  2. Provide and highlight benefits and perks: While offering competitive salaries is ideal, some companies can’t offer more money – even to the most deserving employees. Companies that don’t have the budget to offer more money to employees should consider improving their benefits and perks. While salary is important, employees care about other aspects of a job as well. For example, according to respondents, they’d forego a pay raise for more time off (52%), flexible work hours (42%) and healthcare benefits (42%).
  3. Offer a clear path for success: In the event that the employee’s performance doesn’t yet warrant a salary increase, be clear on what they can do to be on the path for a promotion and pay increase. For example, what skills should they develop to help them perform their job at an optimal level? Are there learning opportunities offered at the company that they might not know about? Steering employees in the right direction will help them understand what they need to do to get the raise they desire.

Salary is top of mind for most employers, employees and job seekers, especially in a healthy economy. It’s important for employers and workers to know how to engage in these sensitive conversations by understanding salary expectations and trends, and rewarding good work even when budget might not always allow for it.

Methodology

The survey was conducted by Censuswide on behalf of Indeed among 1,000 randomly selected employed respondents in Canada, between January 8, 2019 and January 16, 2019. The margin of error is +/- 3.1%, 19 times out of 20.