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Trend Alert: Canadian Salaries Expected to Rise in 2018

As you prepare for next year you are likely already thinking about whether or not to give out salary increases, and if so, how much. Here are two recent Canadian studies that showcase how other employers across Canada anticipate rewarding employees in the next year.

Two Studies Show Salaries Expected to Rise

A recent study by Willis Towers Watson, a Toronto based Insurance Company, surveyed over 300 Canadian employers on whether or not they project base salary increases for all or some employee groups in 2018.

The Willis Towers Watson survey results showed that:

  • 94% of Canadian employers expect to increase salaries in 2018 (up from just 90% in 2017)
  • Employers expect to award base increases of 2.8% – to both executive and non-executive employees

In another Canadian salary study by Mercer Canada, the study projects that Canadian salaries will increase by 2.4% in 2018 compared to the 2.3% increase in 2017.

Salary Increases Need To Be Strategic

The Mercer study found that top performers can expect to receive salary increases of up to 1.8 times that of average performers. Both top performers and those with in-demand skill sets will expect to be paid differently because competition is so fierce.

The Willis Towers Watson study found that most employers are rewarding what they call “star performers” with substantially larger salary increases while giving minimal – if any – increases to their weakest performers.

Employee Retention #1 Priority for Employers in 2018

The Mercer Canada study found that 69% of survey respondents are most concerned about employee retention when it comes to compensation decisions in 2018.

The second highest concern when administering salary increases is overall economic climate.

Alterative Compensations Instead of Salary Increases

Rather than just handing out pay raises only to top performers, or pay raises straight across the board, Allison Griffiths (principal at Mercer Canada), suggest employers look to alternate compensation packages.

For example, extra vacation days, education and skill development, or work-from-home options could be more lucrative than a straight across dollar raise. The report also showed that employee benefit plans can also fit in as an alternative to salary increases in 2018.

About Benefit Strategies Inc.

As employee benefit brokers based out of Edmonton, Alberta, Benefit Strategies Inc. is dedicated to helping Canadian businesses compensate and reward their employees. We service small businesses and corporations throughout Alberta, the Western Provinces and the Northwest Territories.

For more information about how to leverage employee benefits to retain and compensate your employees in 2018 please contact Benefit Strategies Inc. Call us at 1-780-437-5070 or contact our benefits brokers by email.

You might also our article titled How to Deal with Employee Benefits Cost Increase.

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Tips for Minimizng Employee Benefits Cost Increases

Minimizing employee benefits cost increases has always been an insurance industry concern. Let’s look at our options.

Why are benefit costs increasing?

The main reason for the rising cost of employee benefits is because of the skyrocketing costs of specialty drugs. Many of these specialty drugs are new to the market in the last five years and are now starting to affect insurance premiums. Insurance companies do not want to take on the risk of expensive drugs used to treat cancer, rheumatoid arthritis, multiple sclerosis, and other complex illnesses.

Most experts believe that minimizing employee benefits cost increases will be an ongoing concern for employers as the costs of benefits continue to rise. Rather than fret about how you will be able to continue offering competitive employee benefit plans, call our Edmonton employee benefits advisors at 1-780-437-5070. We will be able to offer you creative solutions for reducing the costs of employee benefits.

In this article, our Benefit Strategies advisors will discuss several creative solutions for minimizing employee benefit cost increases.

1. Apply a cap to the drug component of your benefits plan.

Since we know that the rising costs of employee benefits are due to the rising cost of specialty drugs, many employers are placing a cap on the drug component of their employee benefits plan. Many Canadian provinces offer government plans to cover specialty drugs. For example, Alberta Health offers health benefit plans for eligible Alberta residents. In British Columbia, PharmaCare exists for eligible BC residents.

Many employee benefit plan providers are willing to help employees get access to these government programs in the case of unforeseen circumstances.

2. Check out Hybrid Health Spending Accounts.

You no longer have to settle for a defined employee benefits plan or a defined contribution plan. You can have the best of both worlds with a hybrid health spending account, a model that combines a traditional benefits plan with a health spending account. Hybrid employee benefits plans work great for small businesses who buy plans according to their specific needs while limiting employee benefits costs increases. This strategy can go a long way in minimizing employee benefits cost increases.

3. Pay what you actually use with an ASO Insurance Plan.

Many companies who plan to offer employee benefits for the long term are choosing Administrative Services Only plans or ASO Plans. ASO insurance plans are flexible, allowing the employer to fund the plan that is administered by a third party. At the end of the month or year (depending on the ASO plan), the administrator will calculate actual claims and either refund the employer (if the plan was underused) or bill the employer for any overage.

Over time, these ASO insurance plans are often more cost effective, although some businesses may be reluctant to use them because of unpredictable monthly claims.

4. Understand the reasons for your increasing benefits plan costs.

As your benefits plan broker, Benefit Strategies is committed to minimizing employee benefits cost increases. We can help break down and explain the rising costs of your employee benefits plan. For instance, many times the benefits costs increases are occurring because of claims made by spouses and dependents. Once we identify the reasons behind the rising costs we can likely help provide several solutions to minimize any further cost increases.

5. Shop around among different insurance benefits brokers.

If you feel your benefit plan premiums have increased too much you can collect quotes from other insurance benefits brokers. Most of the time it is more beneficial to stay with your company and ask what they can do to lower your rates. At the same time, by making yourself aware of the competitive plans and pricing available on the market you are being a smart and informed consumer. Even if you don’t end up switching providers, you will have the peace of mind that you aren’t paying more than necessary.

About Benefit Strategies

Benefit Strategies Inc. has been providing employee benefits advice to businesses and corporate clients throughout Western Canada for over four decades. Let us help you find creative ways to save money by minimizing employee benefits cost increases. You might also like our recent post on How Benefits Plan Administrators Can Curb Rising Costs.

To learn more, please call Edmonton’s Benefit Strategies Inc. at 1-780-437-5070 or send us an email.

You might also our article entitled Budget Employee Benefits for Small Business.