A survey of Canadian employers shows workers can expect an average wage increase of 2.5 per cent in 2022.

But rising inflation could leave workers with less buying power, study says

Wages are expected to go up in Canada next year, but workers may not feel the difference if salary gains are eroded by rising inflation, according to a new survey and data released Wednesday.

A LifeWorks survey on the salary plans of Canadian employers showed a projected average annual pay increase of 2.5 per cent for 2022.

When excluding organizations that are planning salary freezes, the poll found average salaries are expected to rise 2.7 per cent next year — the highest in half a decade.

But that salary bump could fall short of Canada’s steadily rising inflation rate, leaving workers with less buying power overall.

Statistics Canada said the consumer price index for August rose 4.1 per cent compared with a year ago — the largest yearover-year inflation increase since March 2003.

If inflation continues to increase in the coming months, the situation could leave workers unable to afford as many goods and services.

“When we look historically, salary increases have always been above inflation, so there’s a net gain,” said Anand Parsan, partner and national practice leader of compensation consulting for LifeWorks. “But now inflation is outstripping increases in salary.”

Still, the survey found salaries are set to increase at the fastest pace recorded in five years.

The Bank of Canada has played down inflation concerns, noting that the factors pushing up inflation like pandemic-related supply bottlenecks are expected to be transitory.

Sherry Cooper, chief economist of Dominion Lending Centres, said it’s premature to raise the alarm about inflation outpacing salaries.

“Much of this is wait and see, and the jury is still out because we’re not sure yet if inflation pressures are temporary,” she said, noting that some higher prices reflect a return to normal after prices dropped in 2020 at the outset of the pandemic.

Cooper added that the Delta variant continues to have a significant impact on the economy. Meanwhile, another poll suggests the top priority of some employees may not be a pay raise.

A survey by payroll and HR management firm ADP Canada found work-life balance outweighs salary as top perk for Canadian workers.

When asked to compare their current priorities with those before the pandemic, the poll conducted with Maru Public Opinion found 31 per cent of working respondents said a job that respects work-life balance is more important to them now.

That compared with only 20 per cent who felt salary had become more important.

The survey also found nine out of 10 remote workers polled hope to continue working remotely some or all days of the week, citing work-life balance as the most important factor.